Yahoo's Q1 Display Ad Sales Down 2%

Yahoo’s 2012 Q1 display revenue was down 2 percent year-over-year, totaling $523 million. It marks the second straight quarter where display sales were slightly down, as the Internet company posted 3 percent dip for 2011 Q4.

During a call with investors, CEO Scott Thompson echoed his comments from just after he took the job three months ago, stating that strengthening relationships with brands and agencies was a key focus. The Sunnyvale, CA-based company projects display sales to show growth year-over-year during 2012 Q2, with execs citing good signs from premium ad performance and planned improvements for ad analytics.

“We are not going to be satisfied until we are taking share,” Thompson said. The CEO said he’ll continue to reach out to brands to learn what they need “to bring the best return on their advertising spend. And frankly we got a long ways to go.”

Yahoo’s 2012 Q1 search revenue was $470 million, up 3 percent compared to the same quarter for the previous year. The company’s search sales have evidently steadied after falling 27 percent year-over-year in 2011 Q4 due to the immediate impact of a new strategic partnership with with Microsoft.

“I am personally working with Microsoft to make sure the alliance [is successful] going forward,” Thompson explained.

Meanwhile, the CEO said his firm was refocusing research and development talent on existing products instead of creating new platforms, including ones for publishers and theoretical sciences that “were outside our core.”

“Yahoo was doing too much for too long,” he said, “and was only doing a few things well.”

Citi’s Internet analyst Mark Mahaney has his thoughts on what Yahoo should do. He said Yahoo should be run as a “mature media business” and not a Silicon Valley rising star. “It should take its cash and return it to shareholders, but they won’t do that,” Mahaney said earlier in the day during the Ad Age Digital Conference in New York.

Yahoo, he said, is great brand, “but it was fundamentally mismanaged for years. It’s very hard to pull out of that kind of dive,” he said.

Yahoo’s overall Q1 revenue was up 1 percent year over year. Net earnings rose 28 percent year over year, indicating Thompson’s recent restructuring plan may already be working.

Anna Maria Virzi contributed.