Earnings Takeaway: Yahoo Must Search for New Display Ad Revenue

Yahoo today reported earnings for the fourth quarter of 2012. Fortunately for the company still looking for a comeback in the face of recent internal and external turmoil, earnings topped Wall Street expectations.

“In 2012, Yahoo exhibited revenue growth for the first time in 4 years, with revenue up 2 percent year-over-year,” Yahoo CEO Marissa Mayer said in the earnings statement. “During the quarter we made progress by growing our executive team, signing key partnerships including those with NBC Sports and CBS Television, and launching terrific mobile experiences for Yahoo Mail and Flickr. At the same time, we achieved tremendous internal transformation in the culture, energy and execution of the company.”

Unfortunately for Yahoo, however, its display advertising business isn’t performing up to expectations or its potential.

Yahoo’s display ad revenue saw a 5% decline from the same quarter in 2011. Additionally, the number of ads Yahoo sold fell by 10% year-over-year.

Nonetheless, newly appointed CEO Marissa Mayer is showing promise in her efforts to turn the struggling company around. But until display ad revenue picks up, investors will remain nervous.

“That’s Yahoo’s core business,” says Silicon Alley Insider’s Nicholas Carlson. “It will only turn around when the company begins to figure out new ways to attract and engage new users.”