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Instant View - Yahoo's ad revenue shrinks again, Intel sees lower second quarter

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(Globalpost/GlobalPost)

SAN FRANCISCO (Reuters) - Yahoo Inc again reported a steep decline in display advertising revenue, disappointing Wall Street investors who had hoped for signs that CEO Marissa Mayer is reviving the company's main business.

And Intel Corp forecast a revenue decline of as much as 8 percent this quarter, after a first-quarter walloped by a record fall in personal computer sales.

Commentary:

Yahoo:

COLIN GILLIS, ANALYST, BGC PARTNERS

"The stock bounced all around. It went up on the earnings numbers and now it's down because people are looking at it a little more closely and realizing that its core business is showing signs of weakness, particularly in display ad revenue that declined 11 percent.

"They got more income contribution from their stake in Alibaba and Yahoo Japan than they did from their own operational income. So if you own it as a proxy for Alibaba that's fine, but if you own it because you think the core business is turning around, then you're a little more concerned.

Mayer "just got Henrique De Castro in and he reorganized the sales force, so it's not a tremendous surprise that display is down. Plus ultimately, display will have to move from its direct selling model to more programmatic buying, which is what Google does, and that positioning is going to take several quarters.

"There's no easy way to fix that problem and we're seeing that fact."

KEN SENA, ANALYST, EVERCORE PARTNERS

"Looks like revenue was a little bit light, driven by display. Margins came in a little bit better. Display ads and paid-clicks did miss our estimates."

SAMEET SINHA, ANALYST, B. RILEY CARIS

"The display side continues to be a big disappointment while the search business was slightly better than our expectations.

"People were disappointed by the display advertising because that's Yahoo's key business. We were looking for display to be down about 9 percent, and they came in at negative 11.

"When you compare this to what it was down last quarter -- it was 4.5 percent -- you can see acceleration in the decline. We'll be looking for reasons behind that."

Intel:

STACY RASGON, ANALYST, BERNSTEIN RESEARCH

"My big worry is that they are still holding to the same full-year outlook that they gave before. They left the guidance unchanged, and the first quarter was a little weaker, so they need a bigger lift in the second half. That scares the hell out of me.

"They are holding to the same ultra-bullish forecast they gave before. They are basically betting on lots of lots of unit growth. They are presumably pretty bullish on the new products they are planning. They have their new Haswell chip coming later this year, and a new tablet chip for the holidays."

DOUG FREEDMAN, ANALYST, RBC CAPITAL

"These numbers are not very solid, but the second quarter guidance is better than feared. Conditions are probably not as bad as industry reports have suggested recently.

"Single biggest delta in the numbers was that first-quarter tax rate, which was 8 percentage points lower than I was modelling. That preserved some margin in the first quarter. First quarter gross margins came in at the low end of expectations, but they are guiding up on gross margins going forward.

"People may be surprised by the fact that data centre was down quarter on quarter more than the PC client group. The market really wants to see how they can help customers win in the marketplace. The thinking is that it has to be price, but I don't think that is driving the market.

"They have to help customers build better products and win in the consumer electronics marketplace."

(Reporting By Malathi Nayak and Alistair Barr)

http://www.globalpost.com/dispatch/news/thomson-reuters/130416/instant-view-yahoos-main-ad-business-shrinks-again-intel-line