Yahoo (NASDAQ:YHOO) reported its earnings for the second quarter of 2012, with net revenue (excluding traffic acquisition costs) increasing to $1.08 billion, nearly flat year-over-year. However, the operating income declined nearly 71% primarily due to a jump in restructuring expenses. Both display advertising and search advertising revenues increased only marginally. Yahoo competes primarily with Google (NASDAQ:GOOG) and Facebook (NASDAQ:FB) for advertising dollars. 
Yahoo has seen a major shakeup in its top management in the last couple of months. Just before the earnings call, it appointed Google’s Marissa Mayer as the new CEO, which signals that the new Yahoo will probably focus on its product offerings instead of just content.
The next couple of quarters are going to be decisive for Yahoo’s long-term future as they could pave the way either for a comeback or a continuous slide into obscurity.
Yahoo has undergone significant restructuring, and it also sold half of its stake in Alibaba to its parent group. It settled its patent dispute with Facebook and entered a new advertising partnership with the social networking giant.
Besides these developments, it also launched some new products and services like Axis and Genome, and also signed new content partnerships with the likes of CNBC, Clear Channel, Spotify and Eurosport, which should help cement its position as one of the top Internet media content portals.
Scott Thompson had earlier revealed his plans to restructure Yahoo to focus on three businesses: Media, Connections and Commerce. Now, apparently under Mayer’s reign, the focus will shift back to Yahoo’s varied product offerings like Yahoo Mail, Yahoo Finance, Yahoo Sports, and Flickr and its other media and content portals. Given its renewed focus on its core businesses, it could potentially become a major force in the Internet space again.
We expect Yahoo’s display and search advertising businesses to continue to generate a major portion of its overall revenues. We currently have a $19 Trefis price estimate for Yahoo, which stands nearly 20% above its market price.Notes: