Yahoo Inc's CEO is trying to steer investor focus away from the tech company's stagnant revenue and toward achievements and growth prospects that have been flying below the radar.
Chief Executive Marissa Mayer spent much of Tuesday's earnings call highlighting improvements in Yahoo's mobile business, the benefits from acquisitions and billions of dollars in buybacks.
"This team has now been in place for two years and we’ve achieved much more than many people realize," Mayer said. It was a vigorous defense of her tenure, which has come under fire from activist investor Starboard Value LP.
"I was surprised at the level of detail that she went into," said B. Riley & Co analyst Sameet Sinha.
Mayer never mentioned Starboard by name during an atypically long 80-minute conference call, but analysts said her comments were clearly aimed at parrying Starboard's recent attack and preventing the type of shareholder confrontations that have plagued Yahoo in the past.
"She needed to do this," Sinha said. "People were kind of losing hope," he added, noting a string of analyst downgrades to the company's stock in recent months.
While Mayer is not satisfied with shrinking online display advertising business and promised growth would return in the coming year, she said early results of Yahoo's comeback effort were being overlooked. She unleashed a blizzard of business metrics to prove her point.
To bolster her case, Mayer for the first time offered a peek at Yahoo's mobile business. Mobile revenues exceeded $200 million in the third quarter and she said gross mobile revenue for the year should surpass $1.2 billion.
Tumblr, the social media site that Yahoo acquired for $1.1 billion in 2013, is on track to generate $100 million in revenue in 2015, Yahoo said.
Starboard has blasted Yahoo for wasting money on such acquisitions. But Yahoo noted that the $1.6 billion spent on acquisitions during the past two years was dwarfed by the $7.7 billion it has returned to shareholders during the same period.
Yahoo is a web pioneer, but its revenue growth has persistently lagged rivals such as Google Inc and Facebook Inc. Its revenue in the third quarter is roughly 5 percent lower than it was two years ago, shortly after Mayer took over.
Starboard said last month it had acquired a significant stake in Yahoo and urged the company to cut costs, consider a merger with AOL Inc and quickly "monetize" the Asian assets, which exceed the value of Yahoo's actual business.
Its stake in Alibaba Group Holding Inc remains one of the key areas of investor interest, said JMP Securities analyst Ronald Josey.
But he said that the 80 percent growth that Yahoo said its mobile, video and native ad formats delivered in aggregate during the third quarter was encouraging.
"They are transitioning the business to the modern era," Josey said.
(Reporting by Alexei Oreskovic; Editing by David Gregorio)