Is this the end of Yahoo! Inc. (NASDAQ:YHOO)’s golden era?

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By abarnett on July 18, 2014 Consumer Staples

Since the past year, Yahoo! Inc. (NASDAQ:YHOO) has had its profits deteriorate significantly and this has been a cause of great concern for the company, as commented by Marissa Mayer who is Yahoo! Inc. (NASDAQ:YHOO)’s chief executive officer. Marissa Mayer, as well as the entire Yahoo Team has expressed great agitation over the company’s profit decrease, which has been a 19% decrease since last year, a substantial and prominent difference. The profits now add up to about $270 million. In the previous quarter, the net profit became quite disappointing and has now dropped even further this time, something no one out of the Yahoo! Inc. (NASDAQ:YHOO) family expected. The company’s revenue has plummeted by 4% as well and is now $1.08 billion.

Marissa Mayer, who joined Yahoo! Inc. (NASDAQ:YHOO) a long time ago, has some plans mapped out for making an attempt to save the struggling company. In one of her talks she illustrated that the strategy devised by Yahoo! Inc. (NASDAQ:YHOO) is to heighten the revenue first and reach targets regarding revenue, something that does not seem to be going as planned. The second quarter has revealed some distressing financial outcomes for them as well. On a slightly positive side, Marissa Mayer declared that a couple of areas can still be ruled out as strengths for the company while others, for instance, display advertising, still need a lot of working on. Mayer was of the view, and rightly so, that the company must act extremely quick and produce some amazing results so as to put the unfavorable tendencies behind them and redeem their old reputation.

Along with Mayer’s statement regarding the financial problems being faced, the CEO of Yahoo! Inc. (NASDAQ:YHOO) has further commented on the situation that the company will take all possible measures to proceed towards something more positive. She seemed quite confident that with a newer approach and better strategies implemented, Yahoo! Inc. (NASDAQ:YHOO) will be able to get back on track fast and the growth of the company shall continue in the future.

In addition to these statements, they have also revealed that Yahoo! Inc. (NASDAQ:YHOO) has arrived on an appropriate agreement with Alibaba, according to which Alibaba shall shed lesser shares than it is supposed to, after its first appearance in the market. This understanding between them has trimmed the share numbers to be sold from 208 million to 140 million, a drastic change in numbers. Ken Goldman, the CFO for Yahoo! Inc. (NASDAQ:YHOO) has declared that revenue resulting from the sale of Yahoo! Inc. (NASDAQ:YHOO)’s stake shall unquestionably be returned to all the shareholders. It is to be noted that Yahoo! Inc. (NASDAQ:YHOO) maintains a stake that accounts for approximately 22% in the Chinese online giant, which has recently disclosed their arrangement for a U.S. IPO.

To comment on the display advertising, a factor that is posing as a major problem for Yahoo! Inc. (NASDAQ:YHOO) at the moment, Yahoo has announced that it has gained sufficient revenue by advertising online and also by advertisement through word searches. This has successfully resulted in cancelling out the degraded revenues which were a consequence of display advertising.