Yahoo Earnings Get a Big Lift from China, a Little One from Everything Else


Marissa Mayer is good, but she's not that good.

Yahoo (YHOO) posted what -- on the surface -- appear to be blowout quarterly results. The online pioneer came through with a profit of $2.64 a share for the three months ending in September, blowing past the $0.23 a share it earned a year earlier and the $0.26 a share that analysts were expecting.

There is, however, a meaty one-time gain baked into those earnings, resulting from the sale of part of its stake in China's Alibaba. Back that out and Yahoo's adjusted profit clocks in at a (still impressive) $0.35 a share.

Surpassing expectations hasn't been a problem at Yahoo. The company has actually beat past Wall Street targets for three consecutive quarters. Yahoo's problem lately has been its inability to drum up much in revenue growth.

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Mayer's first quarter as CEO of Yahoo after leaving Google (GOOG) didn't offer any relief on that front. Revenue before traffic acquisition costs rose by a mere 2% to $1.09 billion. Then again, it's hard to pin the blame or even the praise on Mayer. She rolled up her sleeves to tackle her new post a few weeks after the quarter began, taking a brief maternity leave after the quarter came to a close.

Her initiatives to get Yahoo more focused and in sync with its users are unlikely to bear fruit right away. She'll get the time to do that. The market's been generally pleased with her appointment, and Yahoo's balance sheet -- flush with $9.4 billion in greenery -- will give her a big enough easel to experiment on until the company gets it right.

Other Things Worth Watching

• Monster Beverage (MNST) shares should be volatile on Tuesday. The stock took a hit on Monday afternoon after media reports indicated that the Food and Drug Administration was investigating claims that the energy drinks could be a factor in five recent deaths. Energy drinks have come under fire in recent weeks, but naturally Monster is going to counter the claims.

• PC sales may have stalled, but there's still money to be made in making hard drives. Western Digital (WDC) shipped 62.5 million drives in its latest quarter, 28% ahead of where it was a year earlier. The end result is that adjusted earnings more than doubled to $2.36 a share.

Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article. The Motley Fool owns shares of Google and Western Digital. Motley Fool newsletter services have recommended buying shares of Google and Monster Beverage.

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