Yahoo turnaround effort gathers steam in 2Q as online ad rebound lifts earnings, revenue

Yahoo 2Q earnings climb 51 pct, revenue up 2 pct

SAN FRANCISCO — Yahoo Inc.’s turnaround effort wavered in the second quarter as the Internet company’s lackluster revenue growth overshadowed a surge in net income.

The results released Tuesday could cause some investors to doubt the strategy of Yahoo’s no-nonsense CEO, Carol Bartz, who was hired 18 months ago to lead the company out of a prolonged financial funk that has depressed its stock.

Bartz has been able to boost Yahoo’s earnings by cutting costs, but so far hasn’t been able to produce dramatic revenue gains.

The challenges facing Yahoo are similar to those at many other companies that have been fattening their bottom lines by trimming expenses while revenue remains lean.

“We still have plenty of work to do,” Tim Morse, Yahoo’s chief financial officer, said in a Tuesday interview.

He said the second quarter looked fairly strong until June when several large advertisers suddenly reduced their spending. “That has made us incrementally more cautious,” Morse said.

Reflecting that circumspect mood, Yahoo predicted its third-quarter revenue would either remain unchanged from last year or increase by as much as 4 percent.

Yahoo shares fell 69 cents, 4.5 percent, in extended trading after finishing the regular session at $15.20, up 10 cents.

The company earned $213 million, or 15 cents per share, in the three months ending in June. That represented a 51 percent increase from net income of $141 million, or 10 cents per share, at the same time last year.

The earnings were a penny above the average estimate among analysts polled by Thomson Reuters.

Revenue for the period edged up 2 percent to $1.6 billion, from $1.57 billion.

After subtracting commissions paid to its ad partners, Yahoo’s revenue totaled $1.13 billion — about $30 million below analyst estimates.