BoomTown » Q4

Liveblogging Yahoo's Third-Quarter Conference Call: Bartz "Came Down With Something," and CFO Carries On (and On and On and On)

Kara Swisher — Tue, 20 Oct 2009 21:15:15 +0000

Uh-oh, Yahoo CEO Carol Bartz was expected to appear on the Internet giant’s third-quarter earnings call, but she has apparently “came down with something,” according to CFO Tim Morse.

BoomTown is sending over chicken soup right now, but let’s hope she gets her vaccinations tout de suite!

Worst of all, no sassy quotes or cursing, replaced by a very earnest Morse, who sounded like he was once a Boy Scout.

After the markets closed, Yahoo reported better-than-expected earnings on still lackluster revenues.

Overall, the conference call boiled down to one quote from Morse that seems to have been selected as the Yahoo (YHOO) buzzword of the moment:

“The theme for third quarter was stabilization.”

2:02 pm PDT: Investor stuff from guy who sounded like a robot that I completely ignored, since I was much more interested in a conversation between two women about a bad date this past weekend, which I eavesdropped on in its entirety while liveblogging from a Starbucks (SBUX) in San Francisco.

By the way, the man whom the ladies are ripping was a very unstable date!

2:04 pm: Morse jumped on and gave everyone the bad news about Bartz being sick and the good news about the better-than-expected net income, while also updating all the various happenings of the quarter.

“I am happy to report that our Q3 revenue came in above our guidance range,” said Morse, who sounded somewhat jaunty.

Morse reeled off numbers, numbers and more numbers, some stuff about the new marketing campaign ($18 million spent so far and $45 million in the next quarter!) and other stuff about the cost cuts and fourth-quarter guidance.

Also, no sale of the company’s Alibaba in China or the Yahoo! Japan stake, thank you very much!

2:12 pm: Morse also gave a quick update about the search and online advertising partnership Yahoo has struck with Microsoft (MSFT).

His message: The Silicon Vally Internet icon is not out of search, because it is not about the algorithm, but a better search product.

Tim, you might want to roll that claim back, especially since you also might want to notice how well Google (GOOG) has done with its giant math-brains in the search business.

Morse tried mightily to channel Bartz on search, using a comparison she has made about the Intel (INTC) chip, which is widely used by computer makers. Said Morse, it’s the “differentiation” that matters!

I wonder if Yahoo will keep repeating that one, even as its search share continues to decline.

But Morse did make a funny about how many ex-Yahoos are on the Microsoft payroll now, so the partnership transition should go smoothly.

Well, there’s that!

2:28 pm: Morse mentioned Yahoo’s analysts day next week, and then opened up the call to questions.

Analysts always ask very dull questions at earnings calls and this one proved no different.

The first was about display run rate and about the search market in comparison to Google.

What’s the good word? Stabilization, of course!

The next question was about eBay (EBAY), which seems far from the point.

Morse agreed and cut it short.

Then, a question about guaranteed placement and stock buybacks. Zzzzzzzzz–even Morse sounded bored.

The Starbucks lovelorn ladies had left by now, so I was too.

2:37 pm: The next question concerned the affiliate business and how it might be affected by the Microsoft deal.

I immediately summoned the barista, since it was clearly time for a double espresso!

A question came next about when the display ad business would recover from the econalypse. Morse: Stabilization!

Then, a query about gross margins and whether they can be maintained. Morse was not saying, except to point out that there was a “good, old-fashioned, get-your-hands-dirty” attitude at work at Yahoo now about watching costs.

I was suddenly worried about dirty-handed Yahoos, just when the CEO is sick!

Use Purell, please–or suffer the wrath of Judy!

2:43 pm: Another question on ad sales and quality. Thus, I moved onto mainlining coffee beans en masse. I long for a visit from Juan Valdez!

Then, a question about Q4 guidance, which was not good enough for one analyst, who wanted more.

Morse did not really bite, although he talked a lot.

Next, a question about slow-growing page views and what was Yahoo planning to sell of its various assets.

Morse tried to be all silver-lining about page views and would not talk about specific divestitures (nor did he mention the appointment of a new head of Yahoo M&A).

“We continue to look at the landscape,” he said.

What about more job cuts or hiring, since Yahoo added 200 people in the quarter? Morse noted Yahoo was staying strong in tech talent and was “putting feet on the street” in advertising.

Also something about paid inclusion, but a new person at Starbucks was having a really good cellphone argument, so I zoned out of Morse-talk for a second!

2:56 pm: A question about premium and nonpremium inventory. Looks good on premium, said Morse.

The next query was about the different metrics between the new and old homepage, as well as a request for more info about the analyst day next week.

Morse refused to “steal my own thunder” on what is going to happen there. But, there will be thunder? I am always dubious when it comes to Yahoo and thunder.

As for the homepage, Morse said Yahoo was still evaluating the performance.

2:58 pm: Mobile. Aaaaaghhh, another chance for Morse to say not much about anything substantive. Morse: Better and more established! Translation: No moolah yet!

A head count question. Will improvement come from cost cuts due to the Microsoft deal or revenue improvements?

Three guesses and the first two don’t count. Thanks for the row-boatloads of money, Microsoft!

Something about bookings and small-to-medium businesses. Morse did not understand the question and neither did I.

Next, a question on search monetization, which has weakened. Answer: Stabilization!

3:02 pm: A question about the new $100 million branding campaign. Morse: “It’s very, very early.”

Some deal question and then one about behaviorial targeting, which Morse said will apparently be a “lifeblood” of the future.

Incredibly, Morse has gone hog-wild chatty with Bartz laid low and is asking for more questions, without making one good joke or salty remark yet.

I was completely losing it when it gets to ad exchange details and not as coffee-saturated as I needed to be.

Finally, the LAST question: Another one about divestiture and acquisition.

As if Morse was going to answer, referring instead–as he has many times in the call–to his “script.” Yahoo will buy stuff, Yahoo will sell stuff, but pretty much a no-comment!

And on that note…Carol: Please, pretty please GET WELL SOON!

Until then, here is a minidose of Bartz, via video snippets from an interview with me at the seventh D: All Things Digital conference.

Her lively tone seen here at D7 would have been a good thing at today’s earnings call:

[ See post to watch video ]

(And, here is a link to Yahoo’s presentation of its financial highlights, for those with a hankering for even more numbers.)

An Interview With Yahoo's Jerry Yang, Part 1: The Econalypse's Impact and More

Kara Swisher — Thu, 23 Oct 2008 18:51:48 +0000

BoomTown was a squeaky enough wheel to get Yahoo CEO Jerry Yang to grant a long interview by phone yesterday–just a day after he had announced weak third-quarter earnings results for the Internet giant, caught as others are in the econalypse, as well as layoffs of at least 10 percent of its global workforce.

But instead of being glum, as you might expect, especially after a year of corporate turmoil that would have finally gotten to even Job–let’s review: management upheaval, a Microsoft (MSFT) takeover battle, an attack by billionaire activist Carl Icahn, tangling with the Justice Department over a pending Google (GOOG) search advertising partnership and more!–Yang sounded surprisingly confident that Yahoo (YHOO) would emerge a winner after all the wrenching change is wrought at the company he co-founded.

I split the interview into two parts. The second will appear later today at 4 p.m. Pacific time, talking about Icahn, the Google deal, Microsoft and why Yang thinks he is the right leader for Yahoo, so check back.

Here is the first part, in which he talks about Yahoo’s financial performance and the impact of the bad economy on Yahoo’s dominant display advertising business and gives more details of the layoffs and cost cuts.

BT: How do you look at the last quarter?:

Yang: What we said was that the quarter showed some strength in U.S. search and performance display, but more weakness in branded, especially at the end in the U.S., and more so internationally. The U.S. started softening in Q2 and that continued into Q3. International was hit much harder, although display still grew double-digits there in Q3. Softness started in the U.K. early, and we knew when the French came back from vacation in September and did not buy ads at the same levels that those were trends we had to watch.

Asia was more of a surprise, but the same trends were happening there too. Because we have such a big market share there, we are looking to every country for what is coming next.

BT: And what is your Q4 outlook?:

Yang: Like everyone else, we are pretty much forced to formulate our views in an unprecedented set of circumstances because things are changing so quickly and the world looks a lot different than just three or four weeks ago.

There has been some stability, and some business is being done still, but we don’t know how bad it is going to get, and neither does anyone.

Generally, of the spending that is done in the display advertising market online, we get our share.

It is a little like 2001, when online usage continued to go up, but revenue drivers declined. And, even in times like this, the Internet continues to show more engagement.

Obviously, no one knows when the market is going to bottom out, and I am certainly not an economist. You can talk yourself into a loop, but no one really knows where it is going yet.

But when it does turn, people are going to ask where the audience is, and we have to be able to move fast when it turns.

We also said that when advertisers are spending, they are spending with us, which is a good sign. Right now, we don’t hear we are losing deals to social sites, for example.

Of course, I can’t imagine advertisers are going to say we’re going to juice up spending soon, and so we’re assuming a lengthy period of weakness. I don’t think anyone is going to be immune, even though search performance ads are probably more able to withstand a downturn in spending. What was good for us was that our search and our performance display businesses were both up in the quarter.

BT: Any more details about the layoffs and other cuts?:

Yang: We want to do it before the holidays, which is why we wanted to let people know that it would affect 10 percent [of Yahoo's work force]. But we also want to make sure that we are cutting to be more effective and not cutting for cutting’s sake.

We have been growing costs for the last few years while we were investing in new products and platforms, and we have also made a lot of acquisitions and additions. There have been redundancies and geo-consolidation that we had not addressed that we are doing now. I know that sounds generic, but doing this is really important.

I look at these cuts as both a short-term and long-term effort. In the short term, we have consolidation and organizational corrections to make. In the long term, we will look at our whole portfolio and are now asking ourselves in each case if we need to be in this business.

We’re asking ourselves–should we sell it or should we shut it down? That is the kind of comprehensive look we are doing across the company.