Yahoo
Excluding some expenses, profit was 15 cents a share, topping the average prediction of 13 cents in a Bloomberg survey of analysts. Sales, excluding fees passed on to partner sites, were $1.13 billion. Analysts had estimated $1.12 billion.
Online ad spending — Yahoos main source of revenue — is stabilizing as the recession eases. Yahoo also has benefited from lower expenses, following a move by Chief Executive Officer Carol Bartz to eliminate jobs and shut down some Web sites.
“This is an evolutionary process,” said Youssef Squali, an analyst with Jefferies & Co. in New York. He has a buy rating on the stock, which he doesnt own. “Strip out all the components of the revenues, and what youll see is that theyre consistently improving.”
Yahoo, based in Sunnyvale, California, rose as much as $1.12 to $18.29 in late trading after the earnings were released. The shares, up 41 percent this year, closed at $17.17 yesterday on the Nasdaq Stock Market.
Net income attributable to Yahoo more than tripled to $186.1 million, or 13 cents a share, from $54.3 million, or 4 cents, a year earlier, Yahoo said.
Loosening Up
Larger companies are relying more on Yahoos sites to market themselves, Chief Financial Officer Timothy Morse said.
“Advertising spending seems to be loosening up,” he said in an interview. “Its all supportive of this theory that perhaps the economy and the dynamics in these markets have stabilized.”
The results followed an upbeat earnings report from rival Google Inc. last week. Google CEO Eric Schmidt said then that the worst of the recession is “behind us.”
So-called display advertising — graphical ads such as banners — performed better than expected last quarter, said Aaron Kessler, an analyst with Kaufman Brothers LP in San Francisco. He rates the stock a hold and doesnt own it.
Yahoos future sales growth rate is still difficult to predict, Kessler said. “The question longer term is really, What can Yahoo grow at?” he said.
In July, Yahoo and Microsoft Corp. forged a search agreement in a bid to challenge Googles dominance. Under the partnership, Yahoo will put Microsofts Bing search engine on its Web sites and split the related advertising.
The deal enables Yahoo to offload some costs, such as engineering. The agreement needs approval from regulators before it can take effect. Yesterday, Morse reaffirmed the companys expectation that the deal would close in early 2010.
Yahoos U.S. search-market share fell to 18.8 percent in September from 20.1 percent in May, according to ComScore Inc.Microsoft, which introduced Bing in June, rose to 9.4 percent from 8 percent. Google maintained its dominance with 64.9 percent of the market, compared with 65 percent in May.
Yahoo is spending more than $100 million on a global brand- marketing campaign. Its using both online and television advertising to spotlight new features and draw users to the site. Yahoo has redesigned its home page and is improving its e- mail and instant-messaging services.