Yahoo’s profit falls as company remains in financial funk


Yahoo’s third-quarter results showed little evidence of ending the financial funk that got former CEO Carol Bartz fired last month.

The performance, announced Tuesday, may increase the pressure on Yahoo Inc. to sell itself in parts or as a whole.

Yahoo earned $293 million, or 23 cents per share, in the July-September period. That represented a 26 percent decline from net income of $396 million, or 29 cents per share, at the same time last year.


The numbers for both this year and last year were boosted by one-time gains. After adjusting for those items, Yahoo said it would have earned 21 cents per share in the latest quarter versus 16 cents per share last year.

The earnings exceeded the average estimate of 17 cents per share among analysts surveyed by FactSet.

But Yahoo’s revenue is still eroding at a time when the Internet advertising market is growing. That’s a sign of the challenges facing Yahoo as it falls further behind Internet search and advertising leader Google Inc. and Facebook, the Internet’s most popular hangout.

Revenue fell 24 percent from the same time last year to $1.22 billion.

After subtracting ad commissions, Yahoo’s revenue stood at $1.07 billion. That was a 5 percent drop from the same time last year.

The revenue slump will extend into the final three months of the year -- typically the busiest time for online advertising because it coincides with the holiday shopping season.


Yahoo’s fourth-quarter forecast calls for net revenue to range from $1.12 billion to $1.24 billion. If Yahoo hits the middle of that target, its fourth-quarter revenue will be down by about 6 percent from last year.

Normally, Yahoo’s stock falls after a lackluster quarterly report or a cautious outlook pronouncement. But that didn’t happen on Tuesday, partly because many investors have been betting that Yahoo’s financial mediocrity will increase the likelihood that the company will decide to sell itself.

Yahoo shares gained 53 cents, or more than 3 percent, to $16 in Tuesday’s extended trading.

Tim Morse, Yahoo’s interim CEO, declined to address the takeover speculation in a brief interview Tuesday with The Associated Press.