Yahoo! Inc. (NASDAQ: YHOO) reported first quarter financial result on Tuesday after market close. Stock price increased 3.22% to $37.50 on Wednesday morning.
“I’m pleased that we delivered Q1 results in line with our expectations. Our 2016 plan is off to a solid start as we continue to focus on driving efficiency, lowering costs, and improving long-term growth,” said Marissa Mayer, CEO of Yahoo. “In tandem, we made substantial progress towards potential strategic alternatives for Yahoo. Our board, our management team, and I are completely aligned on this top priority for shareholders.”
Yahoo reported revenue of $1.087 billion in the first quarter of 2016, beats the estimate of $1.08 billion. But the revenue decreased 12% compared with $1.23 billion in the same period last year. The company announced non-GAAP earnings per share of $0.08 which slightly beats the analyst’s expectation of $0.07, and decreased sharply compared with $0.15 in the same quarter last year. But the company's costs also rose sharply, losses from operations widened, and overall, it posted negative net earnings, with a $99 million loss.
At the end of 2015, Yahoo’s top executives said it would be looking to offload patents to raise revenue and shrink its costs by cutting its payroll. It went above and beyond with the latter, decreasing the company's payroll by 21%. The company began layoffs in February, with several rounds of weekly cuts designed to cut 15% of Yahoo’s workforce. According to Yahoo CFO Ken Goldman, the layoffs were responsible for a majority of the decrease in the company's operating costs.
Yahoo now is mulling acquisition offers from suitors including Verizon Communications Inc. (NYSE: VZ) and YP, the digital successor to the Yellow Pages, and its board’s members are facing the prospect of being replaced all together during a forthcoming proxy fight.
“They're going to feel the pressure to make sure they're doing the right thing for the shareholders,” Starboard CEO Jeff Smith told CNBC, saying that he believes Yahoo must look to sell itself for the highest possible price.