Yahoo 'adjusted' earnings rise in welcome to new CEO Mayer

Beginner's luck?

Update: 2:05 PM Pacific Time Marissa Mayer's first day on the job coincided with a second quarter earnings report that beat Wall Street's expecatations.

Shares of Yahoo initially rose more than 1% in after-hours trading after the company reported $1.22 billion in revenue, versus $1.23 billion during the same quarter a year earlier. The company's net income was flat at 18 cents a share. (Alternatively, Yahoo net income jumped 45 percent when measured on the "adjusted" basis beloved by Wall Street.)

The news followed by a day the surprise selection of Mayer, whom it plucked from Google.

• Display revenue not including traffic acquisition costs was $473 million, down 1 percent compared to $467 million for the second quarter of 2011.
• GAAP display revenue was $535 million, up 2 percent compared to $524 million during the year-ago quarter
• Search revenue ex-TAC was $385 million, up 4 percent increase from $371 million for the second quarter of 2011.
• GAAP search revenue was $461 million, down 1% compared to $467 million for the second quarter of 2011.

Despite a generally warm reception to her appointment, Mayer faces some formidable challenges. In a research note, Citigroup analyst Mark Mahaney wrote:

Arguably, Yahoo has been mismanaged for 5 plus years, with plenty of blame to go around. The clearest evidence of mismanagement is the lack of any Free Cash Flow growth for multiple years, despite the clear secular growth drivers of Internet advertising. What we are a bit worried about is that by selecting Ms. Mayer, Yahoo! is explicitly pursuing an aggressive and bold Growth strategy, whereas we believe a Value strategy might be more appropriate.

Yahoo's official statement included a brief comment from chief financial officer Tim Morse. Mayer is not expected to participate during the conference call this afternoon with analysts to discuss Yahoo's earnings. We'll be updating this post as more information becomes available.

Update: It's official: No Mayer. Prior to delivering his prepared statement to open the call, Morse noted that "since this is Marissa's first day on the job she will not be joining us today." Hardly a surprise, but it would have made for quite the dramatic flourish.

Later on during the call, Morse was asked whether Mayer would be on the next conference call. "I honestly just don't know," he said. "We will see. She and I have not talked about that yet."

That was also the occasion for him to suck up (a little) to the new boss, saying that her resume "really speaks for itself." But it seems that like most people caught off guard by the Mayer announcement, Morse isn't clear how exactly her talents will mesh with Yahoo's traditional strengths. He said that the company will "need a little bit of time" to work out what her appointment signals in terms of future directions. "We need to be good at certain technologies and need to be great at content," he said, adding that Yahoo has to find a way to combine them. "It's a powerful combination when we get it right."