The warning that precedes all conference calls is usually a short waste of time, but Yahoo’s (NSDQ: YHOO) are actually worth noting, just cause there are so many and they’re pretty real. Among the one’s enumerated by Marta Nichols: uncertainty around the company’s deal with Google (NSDQ: GOOG), customers acceptance of it, regulatory issues related to that deal, future arrangements with Microsoft (NSDQ: MSFT), and the strength of the company’s advertisers, among several other potential pitfalls.
Jerry Yang: “Thank you, Marta, that’s quite a disclaimer…” On yesterday’s news: “Our board and management are pleased to have settled the proxy contest.” The company looks forward to working with the new board members. As for the last months, Yang talked up the company’s performance in light of all surrounding issues. “With all this playing out on virtually a daily basis, this company has (accomplished) a great deal.” As for future deals: “We remain open to transactions that provide real value.”
More from the call, including Q&A, after the jump…
– Query growth up more than 11 percent year-over-year.
– “In CPG (consumer packaged goods) and finance we saw demand for branded campaigns weaken.” But, advertisers are switching to performance.
Sue Decker takes over: “Not withstanding a more difficult economic environment than anticipated, and the external swirl associated with Microsoft, we are on track…” Some key strategic accomplishments she mentioned
– “Publishers are working with us to leverage the breadth of our online advertising assets across search and display.” Yahoo has assets to deliver the right mix.
– Referring to the program that has been known as AMP, but which must change its name. “We’re on track to commence a broader rollout beginning in Q3.”
– “In the second quarter, our query growth accelerated from the first quarter.” Yahoo has gained share in two straight months. (The first time in a long time)
– RPS Growth: Minimum bid changes. I’m very happy to announce that the GAAP 0&0 was up 19 percent, due to query growth and RPS up 5 percent. Internationally, RPS was up double digits. RPS growth is expected to accelerate.
– “Goal is to grow display volume by 12 percent annually, and in Q2 we significantly exceeded that goal.”
– Display yield: non-guaranteed volume and pricing both up double digits in Q2.
– Blake Jorgensen offered up the following figures:
– 14,800 employees.
– Alibaba.com, GMarket and Yahoo Japan worth $10 billion.
– Excluding the change in AT&T (NYSE: T) deal, revenue ex-TAC would have been up 11 percent y-o-y
– Weak revenue growth: Finance, auto, travel.
– Outlook: Midpoint is the same. Narrowing of the range reflects that the year is half over. Outlook does not include impact of Google agreement.
Q&A:
– Asian assets?: Managed was asked about what the company sees itself doing with its Asian assets, and what value they have brought to the company. Jorgensen: “I don’t want to speculate on any potential transactions or spinouts that might have been mentioned in the press… we have examined various (options) in Asia.” In the meantime, they provide unique entryways into fast-growing markets. “Any alternative we have will have to be thought of in the context of trying to defer taxes as long as possible… we want to
– AMP: Decker was asked about AMP, though she didn’t refer to it as such in the question (since it has to change its name for legal reasons). Basically, the company sees it on track, and it’s investing a lot into it. overall it’s a 3-5 year project. Already there are two publishing partners. It’s a tough challenge, in part because display inventory isn’t a commodity. “To do what we’re doing almost requires search as a prerequisite to understand what we’re trying to automate.”
– Alternative options: Yang: still looking at all strategic options. No big specifics.
– Online ad economics: Jorgensen: “We’re not assuming any significant changes in our display growth in the second half… what we’re seeing in the disply business, in general, is more weakness on the brand level and strength on the performance level.” Effort is going towards shifting towards more performance display advertising
– Google deal timing: Decker: ‘We said at the beginning that the review process and ramp up. We are halfway through and there’s no anticipation for that to change.’ No change to revenue outlook. That’s been previously stated as $250-$450 million additional annual OCF.
Call ends: Key takeaways: We did well in spite of distractions. We’re growing and we’re still relevant. Economy is hurting display ads, but we can shift our emphasis to performance. When you factor out changes to the AT&T deal, the numbers aren’t as bad as they look. We’re still open to various strategic deals if they deliver value for shareholders. And so far the stock market is tolerant of the misses and the explanation with the stock up over 2 percent after hours.
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