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Yahoo’s latest disappointing quarter pretty much sums up the past few years

ICE Graveyard 18/07/2016 Matthew Lynley

Yahoo missed its earnings expectations by just a hair, and the company once again wrote down Tumblr. The stock went nowhere.

That is pretty much the story of Yahoo for the past few years. Even in just the past year, Yahoo’s core business has been in decline. Even before Marissa Mayer’s takeover in 2102 the company was on a pretty clear march south. Mayer’s hiring sparked some hope in the company that new leadership would right Yahoo’s direction and return it to growth. After all, Yahoo had a strong core brand and a large existing audience.

The company for its second quarter reported earnings of 9 cents per share on revenue of $1.31 billon. The company also said it was reporting a $395 million non-cash goodwill charge related to Tumblr (meaning, once again, it’s writing down the acquisition). Analysts were expecting earnings of 10 cents per share on revenue of $1.08 billion. Revenue last year was $1.24 billion with earnings of 16 cents per share. Excluding traffic acquisition costs, revenue was $841.2 million — compared to analyst expectations of $839.6 million.

But Mayer’s investments in various acquisitions, including the $1.1 billion acquisition of Tumblr — which was pretty much written off amid a batch of layoffs — weren’t successful in returning the company to growth. Instead it’s seen stagnant interest in the company’s core business and declining performance of its core assets.

Instead of the story of a potential turnaround for Yahoo, the story for the past few months is who will end up buying Yahoo’s core assets. This may indeed have been the last time Yahoo will report its financials, and it’s not surprising that it was kind of a meh result.

Most of the excitement around owning Yahoo’s shares has been the company’s large stake in Chinese e-commerce giant Alibaba. Yahoo’s $36 billion market cap is largely thanks to an early decision made by Yahoo co-founder Jerry Yang to buy up a stake in Alibaba, which is currently worth more than $200 billion. That incredible value gave Mayer a lot of overhead and cash — thanks to a sale of part of its stake — to initiate her turnaround plan.

On the year, shares of Yahoo are down around 4.5%.

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