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Yahoo Q3 Earnings: Trending Up

yhoo q3Yahoo’s earnings are out.  After the close of markets Tuesday, Yahoo launched this quarter’s wave of tech earnings announcements (along with Intel and IBM which also reported).   One headline reads “earnings slip again” another says earnings “encourage investors.”  That’s about right.  With the first 100 days of CEO Jerry Yang’s new tenure now finished, watchers aren’t’ yet sure what to make of Yahoo’s present state… or future prospects.  Some are still concerned while others are seeing the glass half full; maybe even getting fuller.

To the numbers: the trend was positive and analyst consensus expectations were beaten. 

Strategically, the company is focused on where viewers start their Internet travels and trying to make Yahoo a destination advertisers need to cover with their signage.  They seem to be on the right path.

Over the quarter, weak, or under–performing, services were shuttered. Yahoo Music shifted from a weak subscription model to an ad supported environment.  Yahoo Photo was rolled into Flickr

Throughout the company, core strengths like sports, news and email services are being emphasized, as are advertising services – notably via acquisitions (Zimbra for email, for sports and Blue Lithium for advertising).  

On the books the numbers are moving in the right direction.  For the quarter ended September 30th,  net income was $151m (11cents) per share.  That’s down from $159m for the same period in 2006 but well above the consensus expectation of 8cents a share.    Revenue for the quarter was up 12% over last year to $1.76b.   Less commissions to ad partners revenue was $1.28b. Operating income was down a significant 26% from last year to $150m.

The most significant statistical turnaround at Yahoo was with display (banner) ad sales.  After a miserable second quarter, display sales were up 20% this quarter relative to last year.  And that growth may continue to improve thanks to recently signed deals with Forbes,  and Web MD.  Metrics for usage were also up (page views climbed 20percent year over year. Total users rose to 477m, a 14% gain.)

For the 4th quarter, Yahoo expects revenue will fall in the range of $1.3b to $1.45b.  Analysts average estimate is $1.38.

Investors seem to be seeing signs of a much needed turnaround.   In the analysts conference call Yang played to that tone saying “we have a lot more work to do but we are genuinely excited about where the company is headed.”The stock was up solidly in after hours trading.

More detailed press coverage on Yahoo’s finances can be found at:
Yahoo Finance
Google Finance

Related News:
The Return of Jerry Yang
2nd Quarter Earnings Info
Yahoo acquires Blue Lithium
Yahoo acquires
Yahoo acquires Zimbra

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