M+E Daily

The second quarter fiscal results Yahoo reported July 18 were weaker than analysts had expected, but CEO Marissa Mayer used the company’s earnings call to focus largely on the bright spots, including strides that Yahoo’s made on the video and social network fronts. Yahoo has “relentlessly focused on mobile engagement” with the Tumblr social networking site that it bought in 2013, Mayer said. “We’re seeing good growth in engagement with signed-in users, particularly on mobile,” she said. In Q2, the company made enhancements to the popular “GIF Maker” feature on Tumblr that allows users to quickly transform their videos and burst photos into GIFs, she said. Yahoo also launched live video posts to enable users to broadcast videos live to their followers, she said. “As we continue to strengthen our mobile creative tools, we have seen great traction with 84% of our daily average users active on mobile devices,” she said. But Tumblr hurt Yahoo’s second-quarter performance. The company recorded a non-cash goodwill impairments charge of $395 million and a non-cash intangibles impairment charge of $87 million related to Tumblr, CFO Ken Goldman said.

The charges were from a “combination of factors” that he said included decreases in Yahoo’s projected Tumblr operating results and estimated future cash flows.

Yahoo also recently launched updated apps for Yahoo Sports and Yahoo Finance that Mayer said “bring video front and center.” The company “doubled down on live video with NBA exclusives” and also started live streaming Major League Baseball games of the day on Yahoo Sports, along with live coverage of key financial events that included the first global live stream of Berkshire Hathaway’s annual meeting that she said “generated 1.8 million live streams and over 8 million views on demand” on Yahoo Finance.

“Overall, we’ve been really happy with the progress we’ve made on live streaming,” she said later, during the Q&A, adding Yahoo also has partnerships for live streaming in place with the National Hockey League and Professional Golfers’ Association.

Yahoo also recently introduced a Tiles mobile ad format that includes dynamic and interactive features, she said. Yahoo Storytellers, meanwhile, is a new content marketing studio that leverages Yahoo’s editorial initiatives and extensive data to create “engaging premium content,” she said. “While still nascent, we’re pleased to see positive reception from advertisers and active engagement from our early partners,” she said.

The second quarter had its “unique set of challenges” for Yahoo, said Mayer. Those challenges included the fact that the company is still in the process of trying to sell off its core business. She and Goldman provided few new details about that subject on the call. “By separating Yahoo’s operating business from our equity stake” in Chinese e-commerce giant Alibaba “there is substantial value that we can potentially unlock,” Mayer said. The Yahoo board’s independent strategic review committee “continues to manage” that effort and is “making great progress,” she said. “While we have no announcement today, I can say we are deep into the process of evaluating proposals and alternatives, and will update our shareholders as soon as is prudent,” she said.

All of Yahoo management’s plans “likely won’t matter for very long” as a result of the company’s plan to sell off the core business, Pivotal Research Group analyst Brian Wieser said in a research note July 19. Yahoo’s business is “still struggling, and signs of a ‘turnaround’ are still difficult to see,” he said. “At an operational level, Yahoo’s situation has gone from bad to worse in recent quarters, with poor choices at both Board and senior management levels compounding bad luck,” he said, adding: “Virtually all of the stock’s value remains dependent on the value” of Alibaba and Yahoo Japan.