Yahoo Reports Another Profit
Yahoo Inc.’s first-quarter results yielded nothing but net: $46.7 million worth.
The net income figure was in stark contrast to a year-earlier loss of $53.6 million, owing to an accounting adjustment then. Results in the most recent quarter were so encouraging that the Sunnyvale, Calif.-based Internet giant revised 2003 projections upward.
Yahoo’s results were strong in all categories, led by a burgeoning business in which companies pay to be featured prominently in Internet search results.
But it also benefited from fees charged for such services as personal ads and expanded Internet mail services, revenue from listings such as those on its HotJobs help-wanted site and even traditional Internet advertising that remained strong amid economic uncertainty.
“Their numbers came in pretty strong across the board,” said Mark Zadell, Internet analyst with Blaylock & Partners in New York.
Yahoo’s first-quarter revenue climbed 47% to $282.9 million from a year earlier. Its profit of 8 cents a share exceeded Wall Street’s consensus expectation of 6 cents, as compiled by Thomson First Call. Factoring out the year-earlier accounting adjustment, Yahoo’s net income would have quadrupled in the first quarter.
Yahoo expects revenue for the year as high as $1.28 billion, up from a high of $1.22 billion it projected earlier. It also expects earnings before interest, taxes, depreciation and amortization to be as high as $380 million, up from a previously projected high of $330 million.
The quarter is another profitable one for the company in the post-Internet shakeout under the leadership of former Warner Bros. studio chief Terry Semel.
In an interview, Semel said Internet advertising had been surprisingly strong given the economy and the war in Iraq, with major companies such as automakers and packaged goods companies continuing to advertise. The weakness was in travel advertising, he said, which was down overall because of the uncertainty leading up to the start of the war.
Semel said the war had boosted Yahoo’s news and information sites, with visits tripling as users seek frequent updates.
“Those sites have been totally inundated,” he said.
Under Semel, Yahoo has been diversifying from traditional advertising by offering premium services, video entertainment, sports, online dating services, and music and game offerings, as well as products aimed at small businesses.
About 2.9 million users now pay for some Yahoo services, compared with 600,000 when Semel joined the company as chief executive two years ago.
Yahoo’s sponsored searches, in which companies pay for prime spots in Internet queries, have proved especially successful. Yahoo works with Pasadena-based Overture Services Inc., which acts as something of a sales agent for Yahoo.
Yahoo does face increasing competition from such rivals as search engine Google Inc. and Microsoft Corp.’s MSN. This week, Yahoo introduced an enhanced search engine to compete with Google. It also has bought Web-search firm Inktomi for $235 million, a move expected to help boost the prowess of Yahoo’s search engine.
Yahoo’s results were announced after the market closed. In regular Nasdaq trading, shares fell 94 cents to $22.87. Yahoo’s stock has more than doubled since last fall.
