Yahoo chief executive Marissa Mayer turned in an encouraging report card covering her first few months running the troubled Internet company.
The third-quarter results announced last night were not astounding, but they were better than anticipated.
Most importantly, Yahoo's net revenue crept up from the previous year for the third consecutive year.
That reinforced the belief that things are finally getting better at Yahoo after five years of financial malaise, especially with the hard-driving, well-respected Mayer at the helm.
Mayer, 37, underscored her determination to turn around Yahoo by returning to work just a few weeks after having her first baby. Mayer's son was born on September 30, the final day of the third quarter.
Last night's review of the results provided Mayer with her first opportunity to publicly share her vision for Yahoo. The company, which is based in California, lured Mayer away from rival Google in mid-July.
Without providing specifics, Mayer said that she plans to ensure that Yahoo's services become a "daily habit" for its 700 million users. Toward that end, she wants to improve Yahoo's search engine and email service and indicated that the home page of the company's website will get a makeover.
She also pledged to pour more resources into developing services for smartphones and tablet computers. Bolstering Yahoo's product line-up through acquisitions is also on her agenda, she said, although she emphasised that most of the deals she has in mind would target relatively small startups willing to sell for less than $100m.
"Our products will change how people learn, share and communicate," Mayer said. "We will inspire, innovate and entertain."
Yahoo said it earned $3.2 billion, or $2.64 a share, in the three months to the end of September. Most of that profit stemmed from a one-time gain of $2.8 billion that Yahoo pocketed by selling half its stake in Alibaba Group, one of China's most successful Internet companies. Yahoo earned $293m, or 23 cents a share, the same time last year.
If not for the Alibaba windfall and a restructuring charge, Yahoo said it would have earned 35 cents a share. On that basis, the company easily topped the average earnings estimate of 26 cents a share. The earnings also included a $135m benefit from a lower tax rate.
The Alibaba sale left Yahoo with $9.4 billion in cash at the end of September. The company already has earmarked $2.5 billion of the money to pay taxes in the fourth quarter and expects to spend another $3 billion buying back its own stock in an attempt to boost the price.
Yahoo's revenue for the third quarter totaled $1.2 billion, a 1% dip from last year. That comparison is misleading, though, because last year's revenue included money that Yahoo no longer books because of an Internet search advertising partnership that diverts some of its ad sales to Microsoft.
Wall Street focuses on net revenue - the amount of money that Yahoo keeps after paying its commission to Microsoft and other sites that run its ads. Net revenue in the latest quarter rose 2% to $1.09 billion. That was about $10m more than analysts had predicted.
Although modest, the revenue growth is a positive sign after years of steady declines. Net revenue also crept up slightly from the previous year in each of the previous two quarters while Yahoo was being run by other CEOs. The company has gone through five full-time and interim chiefs since it squandered an opportunity to sell itself to Microsoft for $33 per share in May 2008.
Yahoo's struggles since then have exasperated investors because the company makes most of its money from advertising, and marketers have been pouring more into the Internet. Most of those dollars, though, have been flowing to Google, the Internet's search leader, and Facebook., the Internet's social networking leader.
Mayer was one of Google's top executives for 13 years before defecting to Yahoo for a compensation package valued at $59m.
Even though its third-quarter results disappointed investors last week, Google is still growing at a far faster pace than Yahoo. In the third quarter, Google's net ad revenue rose by 14% from last year. Facebook is scheduled to release its third-quarter results later tonight.
