Yahoo rolled into the Carol Bartz era about two weeks ago. Today, the company closed the books on Jerry Yang’s brief executive stint with the release of Q4 earnings. Buried under nearly $603m in one time charges, Yahoo came in with a loss of $303.4m.
$108m in restructuring costs. $488m in Goodwill Impairment from overseas. $7m on the quarter in lingering expenses from defraying Microsoft’s takeover overtures.
It wasn’t the news that was expected, but looking past the one time elements, it wasn’t all bad either.
Revenues less Traffic Acquisition Costs for Q4 were $1.37b, in line with Wall Street expectations. Less the one-time charges, Yahoo profits would have come in at $184m or 17 cents a share, ahead of analyst expectations in the range of 12 to 13 cents. Cash and marketable securities were also up to $3.52b from $2.36b a year ago.
In the earnings call (transcript), new CEO Carol Bartz made a point of noting that adjusted Operating Cash Flowcame at $542 million, “above the midpoint of the outlook.” She said that, “Delivering on profitability expectations is a real achievement in this environment and the company has to be congratulated for that.”
CFO Blake Jorgensen shared similar remarks but noted “the trends in [Yahoo’s] major revenue lines were mixed.”
A few of the areas to watch: search and international revenue. At just 11% growth year over year, worldwide owned and operated search revenue was in below expectations. The good news, however, the US segment was up 18%. “US queries were up more than 10% and RPS grew in the mid-single digits. International search revenue was down, but closer to flat, on a constant currency basis.” Jorgenson added during the call.
Looking forward, Yahoo is forecasting Q1 sales of $1.53b to $1.73b.
Adding a few soundbytes from the call and surveying the rest of Yahoo’s results by the numbers for Q4 and the Full year:
Carol Bartz soundbytes
Bartz: “did I come to Yahoo! to sell the company? The answer is no. I’m here because I see a tremendous collection of assets and because I want to help make Yahoo! even stronger for our users, advertisers, employees and our shareholders.”
Bartz: “am I planning to immediately sell the search business? I did not arrive here with preconceived notions about anything. I’m still learning about the business, and our integrated search and display model. … Search is a very valuable part of our business, understanding the intent and goals of our users as they seek information online is extremely useful to our franchise in many ways.”
• Marketing services revenues were $1,594 million for the fourth quarter compared to $1,590
million for the same period of 2007.
• Marketing services revenues were $6.316 billion for 2008, up 4% from $6.088
billion for 2007.
Owned and Operated -
•Owned and Operated sites generated $1,063 million in marketing services revenue for the fourth
quarter, up 3% from$1,035 million for the same period in 2007.
•For the full fiscal year, Owned and Operated sites generated $4.046 billion for 2008, up 10% from $3.670 billion in 2007.
•At Owned and Operated sites, search revenue in Q4 was $436m, up 11% (up 18% US). Display advertising revenue was $506m, down 2%.
• Affiliate sites generated $531 million in revenue for Q4, down 4 percent from $555 million for the same period in 2007.
• For the full fiscal year, marketing services revenues from Affiliate sites was $2.270 billion for 2008, down 6% from $2.418 billion in 2007.
• Fees revenues were $212 million for Q4, down 12% from $242 million for the same period of 2007.
• For the full fiscal year, fees revenues were $892 million, up 1% year over year.
Revenue Less TAC-
• Revenues excluding traffic acquisition costs (“TAC”) were $1,375 million for the fourth quarter of 2008, a 2 percent decrease compared to $1,403 million for the same period of 2007.
• For the full fiscal year, 2008 revenues excluding Traffic Acquisition Costs (“TAC”) were $5.399 billion for 2008, up 6% Y/Y.
OPERATING INCOME / LOSS
• Operating loss for Q4 was $278 million versus operating income of $191million for the same period of 2007.
• Adjusted operating income (non-GAAP) before depreciation, amortization, and stock-based compensation expense for Q4 was $542 million. That excludes restructuring charges of $108 million,a goodwill impairment charge of $488 million related to the international segment; and $7 million in costs from outside advisers related to Microsoft’s acquisition effort.
•Operating income for 2008 was $13 million versus $695 million for 2007.
• For the full fiscal year, adjusted operating income before depreciation, amortization, and stock-based compensation expense was $1.915 billion. That excludes restructuring charges of $137 million; the goodwill impairment charge of $488 million related to our international segment; and incremental costs from advisers of $79 million related to the Microsoft acquisition offer and review of alternatives.
NET INCOME/ LOSS
• Net loss for Q4 was $303 million, or $0.22 per share compared to net
income of $206 million or $0.15 per share a year ago.
• Adjusted, Non-GAAP net income for Q4 was $238 million, or $0.17 per share
compared to non-GAAP net income of $184 million or $0.13 per diluted share for the same period of 2007.
• Net income for fiscal 2008 was $424 million or $0.29 per diluted share compared to $660 million or $0.47 per share for 2007.
• Non-GAAP net income for 2008 was $642 million or $0.46 per diluted share compared to non-GAAP net income of $652 million or $0.46 per diluted share for 2007.
• Cash flow from operating activities for Q4 was $321 million, down 48% from $622 million for the same period of 2007.
• Free cash flow for Q4 was $219 million, down 34% compared to $330 million for the same period of 2007.
•Cash flow from operating activities for 2008 was $1.880 billion, down 2 percent from $1.919 billion for 2007.
•Fiscal 2008 free cash flow was $1.312 billion (including a $350 million one-time payment from AT&T Inc. recorded in the first quarter of 2008)
• United States revenues in Q4 were $1.338 billion, up 2% from $1.313 billion Y/Y.
• International revenues in Q4 were $468 million, down 10% from $519 million for the same period of 2007.
• United States revenues for fiscal 2008 were $5.190 billion, up 10% from $4,727 million for 2007.
• International segment revenues for fiscal 2008 were $2.019 billion, down 10% from $2.242 billion for 2007.
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