Yahoo Reports Sharp Decline in Revenue From Advertising

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Yahoo’s chief, Marissa Mayer, at a May event. She said on Tuesday that second-quarter profit rose 46 percent, to $331 million.

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Mario Tama/Getty Images

During her first year as chief executive of Yahoo, Marissa Mayer made big strides in changing the company’s culture. But reversing Yahoo’s declining revenue is turning out to be a far stiffer challenge.

The difficulty was underscored Tuesday, when Yahoo reported that revenue from the company’s two primary moneymakers — display and search advertising — fell sharply in the second quarter.

Since arriving from Google last summer, Ms. Mayer has reversed a decline in Internet traffic, and she has tried to improve employee morale by offering new smartphones and free food in the cafeteria. She also helped start a national debate about flexibility and efficiency in the workplace by ending Yahoo’s work-from-home policy. But perhaps more important, Ms. Mayer, 38, has shown that she can move quickly and decisively in executing her plan to improve the company’s fortunes.

“We have made real progress over the last year,” said Ms. Mayer, in a live webcast, emphasizing several products Yahoo released in that period, including new mobile apps, and a redesign for the home page and search. “The people are here. The engine is now up and running.”

Despite the slow ad sales, Yahoo reported that net income in the quarter rose 46 percent from the same period of 2012, to $331 million, or 30 cents a share, primarily on the growth in its investment holdings. Revenue over the same period fell 7 percent, to $1.14 billion, falling slightly short of Wall Street expectations and underscoring the company’s trouble with reviving growth in its core advertising business.

Slowing revenue from advertisement is at the heart of Yahoo’s decline in revenue. And Ms. Mayer’s…

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