SAN FRANCISCO (MarketWatch) � Yahoo Inc. is not about to regain its once-dominant position as an Internet powerhouse, but Monday�s report points to a Web portal capable of steady, if not spectacular, growth.
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That�s great news for the new chief executive, Marissa Mayer, who has scored back-to-back beats after two quarters of solid results, though one analyst argues that it�s time for Yahoo YHOO �to show more initiative.
The lingering doubts were underscored by Yahoo�s stock decline Tuesday, as shares slipped 3% to close at $19.70, despite that company�s fourth-quarter financials beating estimates late Monday.
Yahoo, in fact, put out a weaker-than-expected revenue outlook for 2013, but some analysts appeared to accept the company�s explanation that it faces headwinds in the coming year, including the closure of its Korean operations.
�There are a lot of reasonable explanations here,� RBC Capital analyst Mark Mahaney wrote.
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Still, he echoed the sentiment of most analysts, saying: �Of course, the �Yahoo turnaround story� wasn�t going to be proven in one quarter. If it occurs, we envision a year or longer transition. � We believe new CEO Marissa Mayer is taking the right approach in focusing on product innovation while also returning cash to shareholders � a rare combination in this sector.�
Yahoo said the company bought back $1.5 billion worth of shares in the fourth quarter. �This marks significant progress toward the $3 billion of additional capital return that we announced in September,� Mayer commented on a call with analysts.
She also pointed out that Yahoo in 2012 posted its first revenue gain in four years. The company continues to struggle in a critical area, display advertising. Yahoo revenues slipped year over year in that category. But the company made up for that with stronger-than-expected growth in search ads.
Reuters CEO Marissa MayerPast investor worries about Mayer�s leadership also appear to have dissipated. She had rattled Wall Street after Yahoo announced that she was reviewing the company�s strategy, including a plan to return a big chunk of the proceeds from the sale of its shares in Alibaba to shareholders.
That triggered speculation that Mayer was considering big acquisitions. But that view has changed.
�People feel that Marissa is not going to squander the cash,� BGC Partners analyst Colin Gillis told MarketWatch last week.
Still, some analysts wonder about Yahoo�s position in a fast-changing market dominated by robust competitors led by Google Inc., Facebook Inc. and others.
Pacific Crest Securities analyst Evan Wilson wrote: �We are still waiting for something bold from Yahoo.�
Despite the headwinds, he said, the company�s guidance for 2013 doesn�t point to a bold game plan. �We would describe Yahoo�s new strategy as doing what it was doing before, but better and more mobile. This continues to feel less than bold and not the type of direction that we expect to yield vastly different results.�
He added: �If Yahoo was on the verge of something dramatic and bold, we think we would have had much different 2013 guidance.�
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