Yahoo! profit soars but revenue falls

Yahoo! profit soars but revenue falls

SAN FRANCISCO - Marissa Mayer's quest to revive Yahoo! stumbled on Tuesday with word that revenue from display ads at the heart of its business shrank in the first three months of this year.

Yahoo! profit soared to US$390.9 million (S$482 million), a 36 per cent rise from the same period last year on the back of returns from stakes in Chinese Internet giant Alibaba and Yahoo! Japan. But money from its own online ads sagged.

Yahoo! shares fell more than four per cent to US$22.80 in after-hours trade after the company reported that revenue fell 6.6 per cent to US$1.14 billion in the quarter that ended March 31.

Display ad revenue dropped 11 per cent from the same period last year. In contrast, the overall US digital ad market grew 14.8 per cent to US$9.64 billion in the first three months of this year, according to industry tracker eMarketer.

"To get the company growing at the rate we would like will take several years," Mayer said during an earnings call with financial analysts.

Google and Facebook are expected to account for 41.6 per cent and 6.5 per cent of US digital ad revenue this year, respectively, according to eMarketer.

"It's a similar story in the display advertising market," eMarketer said in a release.

Mayer took over in July at Yahoo! after 13 years at Google, having been hired as the 20th employee and first woman engineer at the company that went on to be the new king of Internet searches.

She joined Yahoo! as the fifth chief executive there in as many years as the struggling Internet search pioneer tried to reinvent itself as a "premier digital media" company after withering in Google's shadow.

Mayer has echoed the mantra of predecessors who maintained that the company could find prosperity by mining information about users to insightfully tailor online content and target money-making advertising.

On Tuesday, she likened her plan to get Yahoo! back up to speed to a series of sprints, with the first leg comprised of bulking up the pool of talent at the company.

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