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Accounting and Finance

Yahoo, still reliant on PCs, posts earnings that disappoint

Mobile is a crucial element in CEO Marissa Mayer's turnaround plan for Yahoo, but the company is still heavily dependant on PCs for its money.

That was evident Tuesday when Yahoo reported its financial results for the last quarter. Revenue from ads displayed on PCs brought in $873 million -- more than three-quarters of the total. Mobile revenue climbed 61 percent from last year, but still reached only $234 million.

This could be one reason Yahoo continues to struggle. Overall sales at the company rose by 8 percent to $1.23 billion. But excluding payments made to partners, sales were down 4 percent to $1.04 billion, missing the analyst estimate of $1.06 billion, according to a poll by Thomson Reuters.

Yahoo's net earnings plunged from $312 million to $21 million.

In announcing the results, Mayer said the company is in the midst of "a multi-year transformation to return an iconic company to greatness."

Since Mayer became chief in 2012, much of that push has focused on revamping services like Mail, Flickr and News so they work better on smartphones and tablets. More recently, Yahoo acquired Flurry, a mobile analytics and advertising company.

Earlier this year, Yahoo held its first conference for mobile developers, encouraging them to build apps that incorporate Yahoo services and ads.

But Yahoo faces challenges to growing its ad business as competitors like Facebook and Google provide sophisticated ways to let marketers target customers. Mobile players like Snapchat and Tinder are also trying new ad strategies catering to a younger demographic.

Yahoo's search revenue last quarter grew by 20 percent to $532 million. The volume of search ads displayed increased thanks largely to its new partnership with Mozilla.

Display ad revenue climbed just 2 percent to $464 million.

Just last week, Yahoo amended the terms of its search agreement with Microsoft, whose Bing service has provided the bulk of Yahoo's search results since the companies struck a 10-year deal in 2009. But now, Yahoo has more flexibility to enhance search across multiple platforms.

Zach Miners covers social networking, search and general technology news for IDG News Service. Follow Zach on Twitter at @zachminers. Zach's e-mail address is zach_miners@idg.com

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