There were several positives in Yahoo!'s (YHOO) earnings call Tuesday, including:
- Revenues increased for the first time since 2008.
- Search revenue surprised and was up.
- Yahoo! is talking to Alibaba again about monetizing part of its stake.
But there were many negatives on the call that left me dissatisfied.
- CEO Scott Thompson is now 90 days on the job and still speaks in too many platitudes. "We need to move faster. We need to get closer to our customer. We need to use our data." Somewhere Carol Bartz is screaming right now saying, "This is who you got to replace me?" Come on. Thompson can say that about any business. Let's get into the nitty-gritty.
- Search revenue was up, which was a surprise, but we need more details about why. Apparently, it's because the 1800 search people at Yahoo! who work on the "front end" did something that yielded a better click-through rate. But was that it? Why didn't they do that in the last two-and-a-half years? It seemed like revenue per search was down. The cost-per-click seemed to be up, which counters Google's (GOOG) recent quarter. How much did Microsoft (MSFT) pay up as the revenue guarantee to help make the numbers? We need more answers.
- The Microsoft relationship in search seems to be a failure. Thompson pointed out that he was directly involved in discussions to improve things. Yet, we don't know what the alternatives are for him: Does he cancel the deal and go to Google? Is that possible? CFO Tim Morse talked about how Microsoft has been working very hard to close the revenue-per-search gap, but it has been the same story for two years.
- Thompson gave a simple answer to the question of what's going on with the Facebook suit over patents. An analyst tried to assess if he was open to doing an AOL-type (AOL) of settlement. There was no nuance in Thompson's response: "They have to pay up." As an investor, that's way too simplified to make me happy that Thompson knows what he's doing on this front.
- Display was down 4% quarterly. Yahoo! argued that the second quarter is looking better, but Display is the real bedrock of Yahoo!'s core. They didn't offer any explanations about why it was down and what they were doing to change that other than "get closer to the customer."
- The Softbank talks are off over the Yahoo! Japan stake. Yahoo!'s 35% stake of Yahoo! Japan is worth $6.4 billion today according to its stock price. I guess Softbank doesn't want to pay the market price and Yahoo! does. It would be great to get that cash back and into the hands of shareholders.
It's time for all the talk from Scott Thompson to turn into action.
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