Results boost Yahoo shares
Yahoo Inc. is getting its geek on again and investors seem to dig it.
Shares in the Sunnyvale, Calif., Internet company climbed more than 9% in after-hours trading Tuesday on the news that third-quarter results beat expectations, sparking optimism about co-founder and Chief Executive Jerry Yang, a Stanford-trained engineer who took over in June.
Revenue rose 14% to $1.28 billion, not the $1.24 billion expected, and net income slipped a less-than-anticipated 4.6%, to $151 million from $158.5 million in the same quarter last year. Per-share earnings in both quarters were 11 cents because Yahoo bought back some stock.
Some analysts cautioned that the day-after reaction might be more subdued after analysts crunched the numbers. Sanford C. Bernstein & Co. analyst Jeffrey Lindsay said they looked good only “on the surface.”
Chief competitor Google Inc. is expected to report Thursday that it is growing at a rate five times faster than Yahoo.
Intel Corp., based in Santa Clara, Calif., also surprised Wall Street on Tuesday with a stronger-than-expected performance. Third-quarter profit surged 43%, and shares jumped 5%, or $1.31, in after-hours trading. In regular trading they had fallen 27 cents to $25.48.
Overshadowed by Google and facing criticism for fumbling opportunities, Yahoo has struggled mightily this year despite an online advertising boom.
Yang said in a conference call with analysts Tuesday that Yahoo was focused on becoming the Internet “starting point” for consumers and a “must buy” for advertisers. “We recognize that we still have considerable work to do,” Yang said. “I believe our new strategy puts us on the right path.”
Yahoo executives pointed to progress in their drive to cut into Google’s lead in Web search and to increase the volume and scope of Yahoo’s advertising business. Yahoo, which has expanded its advertising network through acquisitions and partnerships, said Tuesday that it would replace Google in providing search advertising to WebMD Health Corp.’s websites starting next month. It also announced advertising deals with Forbes.com, Cars.com and Ziff-Davis Media.
Still, said Nollenberger Capital Partners analyst Todd Greenwald, “it is much too soon to say that Jerry Yang has turned this company around.”
At Intel, third-quarter revenue was $10.1 billion, up 15% from the same quarter last year and up 16% from the second quarter, marking the biggest sequential quarterly jump for the chip giant in 10 years.
Net income rose 43% to $1.9 billion, or 31 cents a share, beating the consensus estimates by analysts surveyed by Thomson Financial, who expected profit of 30 cents a share on revenue of $9.62 billion.
The demand for notebook computers has helped to fuel the growth, with Intel’s revenue in the mobile computing market growing more than 30% from the previous year, CEO Paul Otellini said, adding that Intel shipped a record number of server chips in the third quarter.
Intel reiterated that it was trimming 2,000 positions by the end of the year. The job cuts, part of the company’s ongoing effort to restructure and reduce costs, will bring the head count to 86,000, down from 94,000 at the end of 2006.
Otellini said he expected fourth-quarter revenue growth to be about 7%, which analysts said was cautious.
“They are not sure they can do the same thing again in the fourth quarter,” said Ed Mok, an analyst with Needham & Co., an investment bank. He has a “hold” rating on the stock.
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michelle.quinn@latimes.com
