While the investors are still excited about the potential of Yahoo, the tech company has to show them the results to keep up and justify that zeal.
Since Marissa Mayer became the CEO of the company last July, the shares of Yahoo (YHOO) are up by 55 percent. They are increased by 22 percent so far this year. The company is on the verge of taking an ever more profitable 24 percent stake of Alibaba, the famous Chinese e-commerce site, a developed search business, and a bunch of recently redesigned products.
Yahoo announced its first quarter financial reports on Tuesday afternoon. A JPMorgan analyst, Doug Anmuth, said that the company’s Alibaba stake – which is rapidly growing – is worth nearly $14 billion and is successfully contributing to its bottom line.
The search business of the company, which accounts for almost 40 percent of its overall sales, should also help it.
Though Google (GOOG) is leading the industry by a wide margin, the amount that Yahoo gets per search as advertising revenue increased in the first quarter. An analyst with BGC Partners, Collin Gills, said that Yahoo’s search revenues had increased almost 7 percent during the first quarter.
However, Yahoo has to show improvement beyond search only. During the past few years, the company did not get expected financial success from display advertising.
Mayer has taken some steps recently to tackle this problem. After her joining the company, Yahoo has refreshed its home page, improved the interface of Yahoo Mail, and redesigned Flickr service. However, the analysts are still in doubt whether these design tweaks will enhance display advertising. Overall, the analyst expected the company to make 2 percent profit in this sector during the first quarter.
Mayer has brought some cultural changes at the company that turn the shareholders to Yahoo again. However, the company has to assure its investors by showing solid foundation behind all these excitements.