On its Q4 earnings call Tuesday, Yahoo reported a loss of $303 million, due in part to various restructuring underway. But if the impression given by freshly minted CEO Carol Bartz is correct, the company's wise to look forward, not back.
The company managed to deliver above the midpoint of the guidance it previously gave for fourth quarter. Non-GAAP net income for Q4 was $238 million, or 17 cents/share, compared to $184 million or 13 cents/share for the same period last year; alas, with GAAP figured in, it works out to a loss of 22 cents/share.
Yahoo also reported full-year results for 2008: Revenue was $2.209 billion, up 3% over 2007's $6.969 billion. Net income was $424 million, working out to 29 cents/share, down from 2007's $440 million (47 cents/share). the company noted that fluctuations in the currency market hit hard, to the tune of $80 million.
New CEO Carol Bartz Bartz and CFO Blake Jorgensen snapped through the report's basics relatively quickly. Q4 revenues were down just $26 million year-over year, to $1.806 billion; likewise, marketing service revenues were essentially flat at $1.594 billion compared to $1.590 billion year-to-year. Ad revenues from Yahoo's owned-and-operated sites were up 3% year-to-year while similar revenues from affiliated sites were down 4%. (Roughly speaking, owned-and-operated sites account for around two-thirds of revenue.)
But analysts were clearly tuned into the call as much to hear from new CEO Bartz as to take stock of the quarter just past, and Bartz did not disappoint.
"I should have understood all those risks before I took the job," cracked the new CEO at the end of the boilerplate disclaimer recitation at the top of the call, and though stepping out of the way for Jorgensen's earnings recap, the floor was essentially hers during the Q&A.
Stating that the Yahoo brand should stand for "the best information site on the Internet, the front page you walk through to start your day and decide how you're going to manage your day," Bartz outlined her impressions so far, which she emphasized were rather different from those she'd gotten as an outside observer. "This is a fantastic internet property and it doesn't deserve everyone trying to kick at it and pull it apart. This is not a company that deserves to be pulled apart and left for the chickens," she added, joking that the expression was her Wisconsin upbringing coming to the fore.
Recent comScore stats seem to bear that out to some degree. The ratings, noted Jorgensen, have stabilized and the number-two search site still has three times the usage of the number-three search site. That would be Microsoft Live Search, but that's not a name that came up during the call. One analyst tried to raise it, asking who at Yahoo might be charged with conducting talks with the Redmond giant or with AOL.
But Bartz simply wasn't indulging in any discussion of press reports that say she and other Yahoo execs have met in recent days with Microsoft CEO Steve Ballmer. "We have no comments concerning press reports that come from nowhere," she said. "And that will be our consistent theme for this conversation and conversations in the future."
Somewhere, an analyst is applying salve to his scalded telephone ear; somewhere, certain Yahoo shareholders may be crying. But Bartz stated baldly and repeatedly that she "didn't come here to sell the company." That said, it's too soon to assume anything's off the table. "It's my job," Bartz said, "to make sure we look at anything that makes sense for the company and adds shareholder value," citing the need to balance the needs of short-, medium-, and long-term investors.
Something for all investors, and something too for all visitors. Yahoo remains the most-visited site on the net (reporting a new one-day record of 12 million unique visitors on Inauguration Day last week), and Bartz aims to retain "the demographic that serves the entire Web, young to old...I have a totally maniacal focus on delighting our customers, because if we do that, advertisers will come."
That means, in part, assessing the balance between hipness (or, as one analyst tried to frame it, "relevance") and valuation.
"I think it's important to look at things that don't seem as economically interesting in the beginning," Bartz said. "We've got to do that to stay relevant." But a site doesn't need to overdose on hipster buzz. "Our users don't need constant change; they need very, very deep partnership -- a combination of making sure we can monetize what we have and give some sizzle. But not everything has to be this constant churn" of new features and potential distractions.
And trying to chase hipness can backfire, she pointed out; the younger demographic can be finicky, and the MySpace of 2006 can easily become...well, the MySpace of 2009.
Internally, Bartz says, she hasn't had enough time to get to know the company as well as she means to. For now, she says that the inward focus of the last year or so hasn't been fortunate for Yahoo, but the problems aren't as bad as some would claim.
"This organization is very complex," she remarked, "so it's hard to get speedy answers. The good news is that's fairly easy to fix. There are smart people here but they need help with lines of communication." She's also getting a positive sense of the sales staff; she's only met the leadership team so far, but she's looking forward to meeting the rank and file at the upcoming sales meeting. "I'll get to have a beer with them, and that's always good -- that's the best way to get to know a sales force."
With so much in flux, the company was in no mood to provide guidance past the current (first) quarter. Jorgensen noted that radical changes such as those associated with the restructuring and layoffs that have trimmed Yahoo down to 13,600 employees. GAAP revenues are forecast at between $1.525 billion and $1.725 billion, with operating cash flow of $365-$415 million and a predicted tax rate of 27%.
Co-founder and former CEO Jerry Yang was also present for the Q&A. No questions were directed to him. At at 3:00 pm PT precisely, without waiting for the usual conference-center concluding boilerplate, Bartz bid the group farewell and cut off the call cold.