Yahoo Inc. (NASDAQ: YHOO) released its fourth quarter earnings yesterday after the market close, reporting 4.4 billion loss on net earnings and -$4.7 diluted earnings per share, down from $166 million earnings and $0.17 diluted earnings per share in the Q4 last year. Stock plunged more than 8.5% this morning to $26.6, a 52 week low. The market capitalization of Yahoo is around 25.7 billion as of this writing.
Yahoo Inc. Three Months Stock Chart
Source: Yahoo Finance
Yahoo’s revenue only grew $20 million compared with Q4 2014. Negative earnings were largely affected by the annual goodwill impairment test concluded in the Q4 2015. Goodwill impairment for the Q4 was $4461 million, comparing to $88 million in Q4 2014. The goodwill impairment was said to be resulted from the decline in the market cap, projected operating results and estimated future cash flows.
Adjusted EBITDA dropped 47% year-over-year to $215 million in the fourth quarter and EBITDA for the full year 2015 was $952 million, a decline of 30%.
Yahoo’s CEO Marissa Mayer said in the earnings call that her plan to turn the company around is to work on new businesses instead of the existing ones. New businesses include Mavens which grew 45% in 2015 year-over-year and captured 37% of Yahoo’s revenue during Q4 2015.
Meanwhile, she emphasized the importance of growing user engagement on mobile and considers mobile search the biggest opportunity. Mobile revenue for Q4 was 23% of the total revenue, only 3% more than Q4 2014. Further investment would also be made in Yahoo Mail, Tumblr and four vertical utilities including news, sports, finance and lifestyle.
The CEO also confirmed the plan to reduce 15% of the workforce, and to have a workforce 42% smaller than the company had in 2012. ‘This decision is not one we've taken lightly, and we will make every effort to treat affected employees with thoughtfulness, transparency and compassion’, said the CEO.