Marissa Mayer, participating in her first Yahoo earnings conference call since becoming CEO, outlined a broad range of areas in which the company needs to improve.
"It was an active and solid quarter with some nice achievements," said Mayer, who came to Yahoo in July after a sterling career as a top Google executive.
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Revenue was $1.2 billion in the quarter ended Sept. 30, 2012, down 1 percent year on year. Subtracting commissions paid to advertising partners, revenue was about $1.08 billion, matching the consensus expectation from analysts polled by Thomson Financial.
Net income ballooned to $3.16 billion, or $2.64 per share, after a net gain of $2.8 billion related to the company's sale of part of its stake in Alibaba Group back to the Chinese company. That compares to net income of $293.3 million, or $0.23 per share, in 2011's third quarter.
Excluding the Alibaba shares transaction, Yahoo still increased its earnings to $0.35 per share and topped analysts' consensus expectations of $0.26 per share.
She said the company is encouraged by what it considers a "stabilization" of display and search ad revenue, but warned that it will take "multiple years" for Yahoo's revenue to exceed the growth rate of all the markets in operates in, which is her goal.
After subtracting partner commissions, display advertising revenue was $452 million, flat year on year, while search advertising revenue came in at $414 million, up 11 percent.
In the meantime, she promised that customers, partners and investors will see measurable, concrete and consistent progress toward this goal. The third-quarter results, she said, provide "a solid foundation on which to grow."
For the sake of comparison, the U.S. online ad market grew 14 percent in the first half of this year to $17 billion, according to a recent study sponsored by the Interactive Advertising Bureau (IAB) and conducted by PwC US. Search ad spending grew 19 percent, while display ad spending rose 4 percent, compared with 2011's first half.
Mayer stressed the importance of mobile and said Yahoo's mobile offerings and usage have been "growing nicely." She highlighted as achievements in this area a redesign of the Yahoo mobile search page in 23 countries and an updated version of the Flickr application for Android mobile devices.
However, she said the company needs to do more in the mobile arena. "We've made progress, but Yahoo hasn't capitalized on the mobile opportunity," she said. In particular, the company hasn't effectively optimized its websites for mobile, and it has "underinvested" in its mobile front-end development, she said.
Moreover, its mobile product lineup is too fragmented, with more than 76 different iOS and Android applications. "Our top priority is a focused, coherent mobile strategy," Mayer said. This will involve a significant beefing up of the company's mobile staff.
Regarding search, Mayer said that the revenue Yahoo is getting from its partnership with Microsoft remains below expectations, but Yahoo is still benefitting from existing revenue guarantees.
"While our search share is challenged, we're working closely with Microsoft to define the future of search," she said.