Yahoo reports strong Q3 earnings after selling Alibaba shares for US$6.3 billion

27 Oct

Yahoo reported much better-than-expected growth in the third quarter, with mobile business revenue reaching US$200 million, according to Yahoo’s latest earnings report. “We have invested deeply in mobile and we are seeing those investments pay off,”  said Yahoo CEO Marissa Mayer at a recent earnings conference call. “Not only are our mobile products attracting praise and engagement from users and industry awards, they are generating meaningful revenue for Yahoo,” the CEO added.

Since Mayer took over as Yahoo CEO, the company has acquired 30 small enterprises for US$1.3 billion and obtained an army of employees with rich experiences in application development. Yahoo recently introduced an app, News Digest, and a platform that shows messages for marketers on wireless devices.

According to Yahoo’s earnings report, its Q3 revenues reached US$1.15 billion, up 1 percent from the same time last year. With the US$6.3 billion proceeds from the sale of Alibaba shares, its Q3 net income soared to US$6.78 billion. Operational net income was US$543 million, up US$297 million from Q3 2013. Yahoo also revealed for the first time the revenue of its mobile business at US$200 million, or 17 percent of total revenues. The company forecast its mobile business revenue to exceed US$1.2 billion for the whole of 2014.

Mobile ads account for more than 50 percent of income for Google, Facebook and Twitter. Google accounts for 44.6 percent of the mobile ads market while Facebook takes up another 20 percent. Twitter, AOL and Yahoo each has less than 3 percent.

Yahoo currently owns 15 percent of Alibaba shares, worth nearly as much as Yahoo’s market value. By increasing investment in mobile ads and content business, Yahoo reported higher-than-expected Q3 revenues. The company is still in a critical period in its business transition but is clearly on the right path under Mayer.

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