Yahoo, now under new management, reported mediocre fourth-quarter results Tuesday, with flat earnings of $24 cents a share, as well as a 13 percent revenue dip to $1.32 billion.
That will be performance under the interim leadership of CFO Tim Morse, who ran the Sunnyvale, Calif.-based search and media company after former CEO Carol Bartz was fired Sept. 5.
Now, under former PayPal president Scott Thompson, and minus co-founder and former CEO Jerry Yang, the real meat may be in what the new CEO says in remarks to investors during an earnings call Tuesday night.
In a statement, Thompson said Yahoo's operating income had risen 10 percent in the quarter and promised to align resources better in 2012, which could signal job cuts and divestitures. For the year, net income eased to $1.05 billion, or 82 cents, from $1.2 billion, or 90 cents. Revenue declined 20 percent to $4.98 billion.
Investors are curious about Thompson's plans concerning possible divestiture of Yahoo's 40 percent stake in China's Alibaba Group, which could be valued as high as $17 billion, acquired for $1 billion in 2005, as well as its 35 percent stake in Yahoo Japan, valued as much as $5 billion.
During the interim period, Yahoo's board of directors, advised by Goldman Sachs and Allen & Co., conducted a review and may have decided to divest those stakes, or at least recruit private equity partners such as TPG and Silver Lake Partners to acquire minority interests.
Thompson, if he follows the path of most newly minted technology executives, will likely ask for at least a quarter to get to know Yahoo and develop a turnaround strategy. On Monday, under new CEO Thorsten Heins, shares of troubled BlackBerry developer Research in Motion plunged 8.47 percent to $15.56 after Heins told investors he didn't plan much change.
Yahoo founded by Yang and David Filo in 1994, for years was the largest search engine, one of the hottest media companies and one of Wall Street's best-performing stocks. By now, it is mired in either second- or third place behind Google and Microsoft's Bing.
After Yang brushed back a $40 billion bid by Microsoft as CEO, Bartz later negotiated a deal whereby Microsoft and Yahoo share major aspects of their search function. Thompson may be asked if that relationship will continue.
Activist investor Daniel Loeb, whose Third Point Capital holds at least 5.1 percent of Yahoo, argued that pieces of the company that bring it global respect, such as Yahoo News, Yahoo Finance and Yahoo Sports, are highly desirable media properties that had been mismanaged and are worth more.
Thompson and Morse may discuss how they intend to boost value, assuming they don't dodge all strategy questions another quarter.
Also to note: Yahoo's cash and investments and long-term investments rose to about $3.6 billion in the fourth quarter. Any increases would provide more weapons for Thompson to make acquisitions or use to develop new products to rival Google TV and Apple's expected iTV which could both start later in 2012.
Yahoo shares which closed Tuesday at $15.69, down a penny, have lost about 2.5 percent over the past 12 months. They value the company at $19.46 billion, giving it an enterprise value of $17.7 billion.