Yahoo to report muted 3Q14 earnings as its growth remains weak


Oct. 20 2014, Updated 5:00 p.m. ET

Yahoo continues to disappoint in terms of its revenue growth metric

Yahoo (YHOO) is expected to announce its 3Q14 earnings on October 21. Yahoo had disappointed with its second quarter results. Its revenues of $1.04 billion were below consensus estimates of $1.08 billion. Its earnings per share of $0.37 were also below analysts’ expectations of $0.38. Yahoo now predicts its revenues to be between $1.02 and $1.06 billion for the third quarter, which is also below analysts’ estimates of $1.10 billion.

As the chart below shows, taking the mid-point of Yahoo’s expected revenues for Q3, its revenues continue to show a year-over-year decline in the last two quarters.

Yahoo revenues_Q3

Yahoo has failed to tap growth areas

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The growth areas in the digital advertising world are mobile advertising and video advertising. But Yahoo’s still a work in progress in these areas. Google (GOOG)(GOOGL) and Facebook (FB) continue to dominate the mobile advertising market, with Yahoo not figuring in the list of top players in this market. According to a report from eMarketer, even smaller players such as Twitter (TWTR) and Pandora (P) are ahead of Yahoo in the mobile advertising market. Yahoo hopes that it could increase its presence in the mobile market with the help of products such as Aviate and Gemini.

Netflix (NFLX) and YouTube continue to dominate the video streaming market. Yahoo doesn’t figure into the list of top players in this market either. In the third quarter, Yahoo acquired a video streaming platform, RayV, to provide high-quality video content to users. Although Yahoo is trying to grow its video ad business by introducing a few original series, it will need to offer more content to become an important player in this market.


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