Yahoo’s Revenue Soars 47% as Advertisers Flock to Web

Confirming the growing popularity of online media, Yahoo Inc. on Tuesday reported a 47% jump in third-quarter revenue as visitors and -- more importantly -- advertisers flocked to the Web’s most popular destination.

Sales rose to $1.33 billion from $907 million in the same quarter last year. Profit edged up to $254 million from $253 million, both equivalent to 17 cents a share. Last year’s quarter, however, included a gain of $129 million, or 9 cents, from the sale of Google Inc. shares.

Excluding last year’s gain, Yahoo’s profit more than doubled.

Yahoo reaches more people than ever -- 73% of U.S. Internet users every month, Chief Operating Officer Dan Rosensweig said. And, he said, “they’re coming back more frequently, they’re using more services and we’re gaining market share.”

Rosensweig said that it was too early to see the financial fruit of recent initiatives to add special content, such as columns from well-known personal finance writers and videos from war correspondent Kevin Sites.

But other, more interactive features are keeping users at Yahoo longer, and so the company has been able to take full advantage of the fast-growing market for Internet ads. In the third quarter, ad sales jumped 46% to $1.16 billion.

Premium services, including e-mail with more storage capacity, brought in $170 million, up from $110 million in the same period last year. Yahoo said it had 11.4 million paying customers, up 1.3 million from three months before and 50% from a year ago.

Those figures include people who pay for broadband Internet access bundled with Yahoo content. On Monday, Sunnyvale, Calif.-based Yahoo said such services would be offered by another local carrier, BellSouth Corp., reaching nine more states.

“The pace of new service development is very strong,” said Caris & Co. analyst Mark Stahlman, who added that concerns about a summer advertising slowdown had been overblown.

Both banner advertisements and ads linked to search results showed improvement, Yahoo said. After subtracting the amount paid to bring in some ad viewers, revenue rose 42% to $932 million. Before the quarter began, Yahoo had predicted that figure would be $880 million to $930 million.

Goldman Sachs & Co. analyst Anthony Noto said the results boded well for Google, which will report earnings Thursday.

Yahoo shares fell 46 cents to $33.70 in regular trading, then rose to $33.95 after the report.

Yahoo said it would expand its voice services in the coming months and do more with media publishing arrangements now in tests. The company also is expected to continue making more visible deals, such as the just-signed agreement to let users of its instant messaging service communicate with users of a similar program from Microsoft Corp.

Yahoo executives raised their sales projections for the fourth quarter slightly, and Stahlman said brokers probably would increase their estimates for 2006.

“We’re still only dealing with millions of people, not yet billions,” he said. “When you’re down below 10% of your potential addressable market, these kinds of growth rates can be sustained for many years.”