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Yahoo revenue drops, but profits rise 8 per cent in Q2

James Niccolai | July 22, 2009
Less ad revenue led to the decline while overall the company fares much better than analysts had predicted

SAN FRANCISCO, 21 JULY 2009 - Yahoo on Tuesday (21 July) reported second-quarter revenue of US$1.57 billion, down 13 per cent from a year earlier as companies continued to spend less on advertising.

Its net profit for the quarter, ended June 30, was $141 million, or $0.10 per share, an increase from $131 million, or $0.09 per share, in the same quarter a year earlier, the company said.

Excluding one-time charges, which included a $65 million restructuring charge for severance payments and other items, the net profit was $229 million, or $0.16 per share, much better than the $0.08 per share that analysts had been expecting, according to Thomson Reuters.

"Considering the economy, I'm pleased with our results," CEO Carol Bartz said in a conference call.

Revenue from marketing services, which includes Yahoo's online advertising business, declined 13 per cent from a year earlier, while "fees" revenue, which includes money from paid services such as music downloads, declined 8 percent, the company said.

The revenue was pulled down by changes in exchange rates and the sale of Yahoo's Kelkoo business last year, the company said. Excluding those factors, revenue would have declined by 6 per cent instead of 13 per cent, it said.

Yahoo is under pressure to revitalize its Web sites and generate financial results that compare better with those of Google, the market leader in search and search advertising.

Google reported its second-quarter results last week. Its revenue increased by 3 per cent, to $5.52 billion, while net income before one-time charges was $1.71 billion.

Yahoo is rolling out a new home page Tuesday as part of its recovery effort, hoping to pull more people into its orbit of Web sites. The new page adds a column of "favorites" on the left of the screen that provides access to services from other companies, such as Facebook and e-Bay.

Yahoo's on-again, off-again talks with Microsoft continue. Once again last week the companies were reportedly close to a search and online advertising deal, one that could see Microsoft pay several billion dollars for Yahoo's search advertising business.

Microsoft tried to buy Yahoo last year but eventually dropped its bid in a saga that cost Jerry Yang his job as CEO. He announced plans to step down in November and was replaced by Bartz in January.

Yahoo has also been cutting jobs to reduce costs. In May it said it would lay off 5 per cent of its staff, or about 680 people. That followed cuts of about 2,600 employees in two rounds of layoffs during 2008.

Yahoo Web sites accounted for 19.6 per cent of Internet searches in June, down a half-percent from the month before and well behind Google's 65 percent, according to figures from comScore. Microsoft was third with 8.4 per cent of searches, up slightly on the strength of its new search Web site, Bing, comScore said.

 

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