Yahoo! Inc. (YHOO) Ad Business May Not Show Turnaround Progress

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Yahoo! Inc. (NASDAQ:YHOO) is scheduled release its next quarterly results report on Tuesday, and even though the search company has rolled out a lot of changes over the last few months, analysts aren’t expecting much. Consensus estimates indicate that they are expecting another year over year decline in this year’s results.

Yahoo! Inc. (YHOO) Ad Business May Not Show Turnaround Progress

Analysts estimate EPS of 33 cents

This time around, analysts are looking for earnings of 33 cents per share on revenue of $1.08 billion. That’s compared to earnings of 35 cents on revenue of $1.09 billion last year. In the previous quarter, sales of display ads fell 12 percent compared with the same quarter a year ago. Revenue fell 7 percent to $1.14 billion.

Kara Swisher of All Things D reports that CEO Marissa Mayer, who has held the position for 15 months now, is trying to attract long-tail advertisers, although one insider at the company told her that it’s “long past due” and that they don’t know if it will make up for the premium side damage. She reports that insiders told her that third-quarter in-stream ads revenue at Yahoo! Inc. (NASDAQ:YHOO) “is in the low hundreds of millions of dollars” and that the company is hoping for greater returns in the fourth quarter.

Also the company’s ad quality is still not good, with many of the advertisers posting on the company’s sites being those which typically book late-night cable television spots.

Are Mayer’s changes at Yahoo making a difference?

So the big question investors are asking now is whether the changes which are being made at Yahoo! Inc. (NASDAQ:YHOO) are making any difference. All of the company’s online destination look pretty much the same, with Swisher now calling them “slightly numbing and decidedly robotic” and “removing almost all feeling that humans touched the page.”

There’s a nonstop scrolling news feed with content which mostly comes from outside sources. Periodically there are some in-stream ads which look a lot like content. Stream Ads are now in every part of Yahoo! Inc. (NASDAQ:YHOO)’s online properties, including Yahoo Mail. The search giant is also increasing its premium ad options by offering choices like drop-down billboards with sound. Insiders aren’t so sure that what she’s doing will successfully turn the company around.

Alibaba won’t save Yahoo

Yahoo! Inc. (NASDAQ:YHOO) shares have been getting a lift from Alibaba’s strong earnings this year, but those results will not bolster Yahoo for much longer. Tuesday’s results will be a key indicator of how the company’s recovery efforts are doing. Will it sink or swim?

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