Earnings Preview: Yahoo

| About: Yahoo! Inc. (YHOO)

Yahoo! (NASDAQ:YHOO) is expected to report Q2 earnings after the market close on Tuesday, July 17, with a conference call scheduled for 5:00 pm ET.


The consensus estimate is 23c for EPS and $1.10B for revenue, according to First Call. The whisper number is 55c. Yahoo's earnings for Q2 will be clipped by an anticipated charge of up to $145M to cover severance costs for laying off 2,000 employees, or about 14% of its workforce. Yahoo's Q2 results are likely to highlight challenges facing new CEO Marissa Mayer, imported from Google (NASDAQ:GOOG). Most analysts believe Yahoo's Q2 revenue will be just slightly above last year's at this time -- helped by gains from the ads that Yahoo has been selling to run alongside the widely watched news, sports, finance and entertainment video clips on its website. But investors want to see some of the same robust growth that Google and Facebook (NASDAQ:FB) have enjoyed for years. Yahoo also is expected to get a lift from revenue generated from its large stakes in two of Asia's most successful Internet companies, China's Alibaba Group and Yahoo Japan. Some analysts believe Yahoo will prune even more from its operations as it tries to increase its profits and elevate a stock that has been sagging since the company balked at a takeover offer from Microsoft (NASDAQ:MSFT) for $33 per share more than four years ago. Going forward, most expect continued organizational changes at Yahoo!, although they believe that structural changes regarding the monetization Yahoo!'s stake in Alibaba Group should support shares.