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Yahoo upbeat, but only just

business Updated: Jan 29, 2013 22:21 IST

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Yahoo Inc forecast a modest uptick in revenue for the current year as it revamps its family of websites but chief executive Marissa Mayer warned it would be a long journey to revive the Internet company’s fortunes.

In Yahoo’s first financial outlook since Mayer became CEO in July, the company outlined a plan to trigger a “chain reaction of growth” by overhauling a dozen of its online services to increase the amount of time users spent on its websites.

It also pointed to strength in its search advertising business and progress made in improving its internal operations.

Yahoo’s shares were 3% higher in after hours trade after the revenue projection was disclosed during an analysts conference call, shedding some ground after earlier rising as much as 4.5%.

But weakness in Yahoo’s display ad business — which accounts for roughly 40% of the company’s total revenue — caught some analysts by surprise.

“While the road to growth is certain it will not be immediate,” said Mayer, a former Google Inc executive and Yahoo’s third full-time CEO since September 2011.

Yahoo said that revenue excluding fees it pays to partner websites will range between $4.5 billion and $4.6 billion in 2013, implying an annual growth rate of 0.7% to 3%.

Finance Chief Ken Goldman also warned investors to expect “an investment phase” in the first half of the year which he said would impact profit margins.

“What was clear from the call is that this is a long-term turnaround story,” said Macquarie Research analyst Ben Schachter. “We shouldn’t expect anything to just snap back and correct itself.”

During the fourth quarter Yahoo’s net revenue increased 4% year-on-year to $1.22 billion as search advertising sales offset a 10% decline in the number of display ads sold on Yahoo’s core properties.

Mayer said the decline was the result of less activity by visitors to its popular websites such as its Web email service and to a lesser extent due to users accessing the Web on smartphones.