Yahoo reports another sales drop as ad clicks yield less

Yahoo's revenue and profit were both down from last year, though it has more users

Marissa Mayer presents Yahoo's earnings results Tuesday

Marissa Mayer presents Yahoo's earnings results Tuesday

Yahoo reported a 5 percent drop in revenue for the third quarter, with the money it makes from display and search ads both continuing to decline.

Revenue for the period ended Sept. 30 was US$1.2 billion, down 5 percent from a year earlier, Yahoo said Tuesday. Excluding traffic acquisition costs, revenue was down 1 percent.

Its profit for the quarter was $297 million, much lower than last year, when it made a big one-off gain from selling shares in China's Alibaba Group. On an operations basis, Yahoo's profit for the quarter was $93 million, a drop of 39 percent.

"I'm very pleased with our execution, especially as we've continued to invest in and strengthen our core business," CEO Marissa Mayer said in a statement.

Mayer took over the company last July and is trying to restore Yahoo to its glory days, by making products like Yahoo Mail cool again. She's also made a string of acquisitions, including Tumblr for $1.1 billion.

The number of people using Yahoo's services has grown -- on Tuesday it said it has 800 million monthly users, up 20 percent in 15 months -- but it hasn't turned those users into top-line growth.

Yahoo sold slightly more display ads last quarter than it did a year earlier, but the price per ad (excluding Korea) fell, bringing display revenue down by 7 percent, to $470 million, the company said.

It also sold more clicks on ads -- they were up 21 percent from last year -- but the price per click (excluding Korea) also declined, by 4 percent. Search revenue overall fell 8 percent in the quarter, to $435 million.

Mayer was due to address investors and analysts Tuesday afternoon. She shuns the usual analyst conference call for a webcast that can be viewed here, at 2 p.m. local time.

James Niccolai covers data centers and general technology news for IDG News Service. Follow James on Twitter at @jniccolai. James's e-mail address is james_niccolai@idg.com

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