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Yahoo! reverses! reversal! FLIPS! profit! into! loss!

Purple Palace blows $200 MEELLLION on buying goofy eyeballs

Yahoo! has reported a $22m loss for its second quarter, as CEO Marissa Mayer tries to buy market share off Google and Facebook.

For the same period last year, the ad business booked a $270m profit, so the quarter represents a slump of nearly $300m.

The loss, which Reuters briefly described as a “lower-than-expected profit” before it was amended to “lower-than-expected revenue”, on the back of flat sales, at $1.04bn (after deducting fees paid to partner websites).

Had the Purple Palace been a little less extravagant in its eyeball-spend, things wouldn't look quite so dire: its traffic acquisition costs (TAC), at around $200m, more than quadrupled over Q2 2014 ($44m).

That's not all: CFO Ken Goldman told the earnings call TAC will keep rising for the next few quarters.

While Mayer described herself as “extremely pleased” (partly because revenue grew 15 per cent year-on-year) with the result, Wall Street was unimpressed: shares fell marginally to $39.34 per share.

The company said its search presence “has steadily grown”, and its display ad business rose by 15 per cent, its best performance since 2010.

“Mavens” – mobile, video, native ads and social – rose by 60 per cent year-on-year.

However, eMarketer analyst Martin Utreras told The New York Times that other outfits were growing faster, so Yahoo! is losing market share in segments like mobile advertising, where it was a latecomer.

Mayer reckoned mobile search still offered the chance to compete with Google and Bing.

The next big Yahoo! event for money-followers will be whether its plan to spin out its Alibaba stake gets the nod from US authorities, and – if so – how it will be taxed. ®

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