Yahoo! issued its Q1 07 earnings report today and the news wasn’t good. After a wobbly 2006, Yahoo! had promised to turn things around in 2007 with a new improved ad system called Panama. Based on Q1 07 results, the company really has to go gangbusters through the remaining three quarters of this year.
Although revenues advanced by 7% year-over-year to $1.7 billion, they slipped by 1.7% sequentially. More troublesome was an 11% drop in profits, which decreased from $159.9 million to $142.4 million year-over-year as the growth in operating expenses exceeded the rise in revenue.
Although international revenues are on the upswing, U.S. revenues stayed flat at $1.1 billion year-over-year and actually slipped by 1.4% sequentially.
Another sign of chronic sluggishness at Yahoo!: Page views shot up by 22% year-over-year, and by 16% sequentially, even as revenues grew by only 7%. As Larry Dignan points out, this might mean Yahoo! has inventory it can’t monetize properly.
Larry also says that Yahoo!’s earnings call for analysts didn’t go well. (No chance to listen to it myself.) He said that Semel didn’t sound polished while CFO and most-important-executive-behind-Semel Sue Decker “seemed off her game.”
Two years ago, Semel seemed so in control during these type of events and, despite the barbs emanating from Silicon Valley-types, so strategically sound. That hasn’t been the case during the last few earnings calls and investor presentations that I’ve caught, and I didn’t feel that it merited mentioning —- after all, it’s kind of a weird thing to say. It’s an unscientific, non-quantifiable conclusion that could have been just in my head.
Apparently not. Owen Thomas at Business 2.0 has a run-down of the earnings call replete with commentary on the performance of the top two execs. He also thinks the top two execs weren’t performing well on the call.
| Yahoo! Selected Financial and Operating Data ($ in 000s except per user) | |||||
| Q106 | Q206 | Q306 | Q406 | Q107 | |
| Revenues | $ 1,567,000 | $ 1,575,854 | $ 1,580,322 | $ 1,702,448 | $ 1,671,850 |
| Cost of revenues | $ 657,943 | $ 645,767 | $ 681,120 | $ 690,893 | $ 713,637 |
| Total operating expenses | $ 707,900 | $ 700,500 | $ 696,862 | $ 703,728 | $ 789,186 |
| Net income | $ 159,859 | $ 164,300 | $ 158,529 | $ 268,673 | $ 142,424 |
| Revenue by Group | |||||
| Marketing Services | $ 1,380,854 | $ 1,386,245 | $ 1,370,374 | $ 1,489,734 | $ 1,468,619 |
| Fees | $ 186,201 | $ 189,609 | $ 209,948 | $ 212,714 | $ 203,231 |
| Total | $ 1,567,055 | $ 1,575,854 | $ 1,580,322 | $ 1,702,448 | $ 1,671,850 |
| Revenue by Segment | |||||
| United States | $ 1,097,038 | $ 1,070,134 | $ 1,054,048 | $ 1,144,702 | $ 1,100,757 |
| International | $ 470,017 | $ 505,720 | $ 526,274 | $ 557,746 | $ 571,093 |
| Unique Users (mil.) | 402 | 412 | 418 | 423 | 477 |
| Active Registered Users (mil.) | 208 | 208 | 215 | 219 | 238 |
| Premium Users (mil.) | 13.3 | 14.3 | 15.5 | 16.3 | 16.5 |
| Ending Daily Avg. Page Views (bil.) | 3.8 | 3.9 | 4.0 | 4.0 | 4.6 |
| Revenue ex-TAC per Average Unique User Per Month | $ 0.95 | $ 0.92 | $ 0.90 | $ 0.97 | $ 0.88 |
| Worldwide Headcount | 10,098 | 10,500 | 11,000 | 11,400 | 11,700 |
The Wall Street Journal’s Matthew Karnitschnig has this piece today that says Time Warner is thinking of lowering its investment stake in Time Warner Cable because, in part, the Internet is emerging as a “viable venue for watching TV.” The question of whether Time Warner should reduce its 84% ownership stake in separately traded Time Warner Cable will even be put before the board at an annual strategic review next month.
The idea that the broadband Internet (which, in North America is primarily delivered via cable) might replace cable’s traditional role as packager of programming is, or rather was until today, an unthinkable and incendiary concept to most cable operators. Even Time Warner Cable CEO Glenn Britt scoffed at the notion during a May 2006 investor conference.
Something obviously has shifted in the thinking of Time Warner for insiders to be leaking this very notion to the Journal.
The fact that Time Warner is even willing to think about a major reduction of its cable holdings is a sign of how much attitudes toward the cable industry are shifting. Despite cable’s recent streak on Wall Street and its success in attracting customers to its bundled offering of Internet, telephone and television service, this is a business some analysts believe will become increasingly commoditized, squeezing profit margins.
However, don’t look for action anytime soon. Cable may become increasingly commoditized, but Time Warner Cable still accounts for the bulk of Time Warner’s cash flow and is the biggest, consistent revenue generator for the media conglomerate.
It’s no surprise that the most content-invested cable company would be the first to publicly brand the Internet as competition in video programming delivery. Time Warner, just as Viacom did back in the early 1990s, could jettison a lot of headaches, but still hold onto the crown jewels — its video properties — if it managed to back out of its physical distribution role. Among the hassles are the constant need to find money to fuel capital hungry cable systems and the ever-present need to deal with local government authorities.
Update: A curious 180-degree view of cable versus web is offered by Time Warner President/COO Jeff Bewkes, heir apparent to take over Time Warner when current CEO Dick Parsons retires next year. Bewkes thinks “Television is very important and increasing in value, and network-based interactive TV is very powerful.” He also thinks the hype about online video is too “one-sided.” Makes you wonder even more about the insider that planted the WSJ story.
Posted by Cynthia Brumfield at 7:42 AM | Print | Comments (0)The New York Times’ Sarah Lyall has this piece today about a web site that provides video of a cheddar cheese called Cheddarvision. And the site shows nothing but a cheddar cheese, maturing and molding over time in a farmer’s warehouse in Westcombe, England.
As weirdly boring as that sounds, the site has attracted over 919,000 visitors as of this morning and the cheese has received a valentine, Easter presents and even a wedding invitation. The cheese actually has its own MySpace page and has attracted over 500 friends.
How to explain this? While budding video filmmakers toil to create short films that someone will notice on YouTube, a time-lapsed video of the cheese’s maturation has been viewed nearly 70,000 times. The cheesemaker Tom Calver thinks that the cheese is comforting to some.
Mr. Calver is not quite sure why anyone would want to watch his cheese, although he said it might have something to do with the frenetic and provisional nature of life today.
“It’s a security,” he said. “It’s something that’s there 24 hours a day. I heard of someone who said they looked at it before bed and found it a nice, comforting thing. You should really talk to a psychologist.”
Comforting or not, the cheese is oddly compelling (and you have to look at the cheese once you know about the site). It may not be an artistic accomplishment, but Cheddarvision is a stroke of marketing genius by a group of farmers that call themselves West Country Farmhouse Cheesemakers. The site lures visitors with the promise of cheddar video. Once there, buying the group’s cheese, or finding a store that sells the cheese, is a click away.
Posted by Cynthia Brumfield at 5:29 AM | Print | Comments (0)
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