Ad Revenue Helps Yahoo’s Earnings Rocket

For Yahoo Inc., surfing the Net meant boosting the net in 2003.

The Sunnyvale, Calif.-based Internet giant closed out the year with its best results ever on the strength of online advertising and fees for services it offers.

Yahoo’s fourth-quarter net income rose 62% to $75 million, or 11 cents a share, which matched the expectations of analysts surveyed by Thomson First Call. That compared with year-earlier net income of $46.2 million, or 8 cents. Yahoo’s revenue more than doubled to $663.9 million. For the year, Yahoo’s profit more than doubled to $237.9 million, and revenue rose 71% to $1.63 billion.

“This was a very solid quarter,” said Safa Rashtchy, Internet analyst at Piper Jaffray.

Still, investors pushed the stock down to $46.60 in after-hours trading from its official Nasdaq close of $48.39.

The results complete a second full year of surging profit under Chief Executive Terry Semel. The former co-chairman of Warner Bros. was hired in 2001 to turn the company around.

Yahoo has been transforming itself from a search engine into a broader, online media company amid growing competition from such rivals as Google Inc. Yahoo’s biggest move last year came with the $1.8-billion acquisition of Pasadena-based Overture Services Inc., which developed a lucrative technology in which advertisers pay for prime spots in Internet search results.

Marketing services, which includes advertising, saw revenue jump 178% to $545.5 million in the quarter, sending the total to $1.2 billion for the year.

“Advertising was dramatically stronger,” Semel said, citing growing advertising by companies in such industries as autos, electronics, finance and entertainment. Semel added in an interview that Yahoo expected its advertising to rise by 25% to 30% in 2004, larger than the 20% increases being forecast by some for the online industry.

Yahoo also has benefited from larger fees for such services as expanded e-mail storage space and online dating. Yahoo said revenue from services jumped 37% to $85.2 million in the quarter. Listings, which includes revenue from job listings, saw revenue rise 21% to $33.2 million in the fourth quarter.