Yahoo Reports Second Quarter Financial Results

On Monday after market close, Yahoo! Inc. (NASDAQ: YHOO) announced the second quarter financial result. Shares of Yahoo increased 0.45% to $38.12 on Tuesday.

According to the earnings announcement, revenue decreased approximately 5% to $1,243 million compared with $1,308 million in the same quarter last year. Net loss was $22 million which down 95% from last year net loss of $440 million. Diluted earnings per share was negative $0.02 compared with last year negative $0.46.

“With the lowest cost structure and headcount in a decade, we continue to make solid progress against our 2016 plan.  Through disciplined expense management and focused execution, we delivered Q2 results that met guidance across the board and in some areas exceeded it,” said Marissa Mayer, CEO of Yahoo.  “In addition to our efforts to improve the operating business, our board has made great progress on strategic alternatives.  We are relentlessly focused on delivering shareholder value.”

The company is in the process of auctioning off its core business, and is expected to pick a winner before this weekend. Yahoo mentioned its board has made big improvement on strategic alternatives, but did not stated more details about the auction process.

The second quarter financial results announced on the same day as a due date of third and potentially final round of bids. The months long period is expected to whittle a field of dozens of potential buyers down to a handful of serious competitors.

During conference call, Ms. Mayer said Yahoo was “deep into the process” of evaluating proposals and would update shareholders when prudent. Yahoo aims to wrap up the auction until the end of July. The remaining bidders are expected to include Verizon Communications Inc. (NYSE: VZ) and private equity firm TPG.

“I can’t imagine why the sale process is taking so long, the only thing I can think of is it’s being overpriced. This report doesn’t further create an impression that paying up for these assets has any value.” Ross Gerber, cofounder and CEO of Gerber Kawasaki Wealth and Investment Management, said.

Yahoo’s core business is difficult to value because the majority of its approximately $36 billion market value is attributed to its valuable stakes in Alibaba Group Holding Ltd (NYSE: BABA) and Yahoo Japan Corporation (TYO:4689). Brian Wieser, analyst at Pivotal Research, estimates the core business is worth around $3.5 billion. BGC Partners analyst Colin Gillis estimated its value at $5.15 billion.

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