Yahoo Inc, owner of the most-used Web site for searching the Internet, had a US$48.5 million loss in the second quarter as sales of advertising on its Web pages declined.
The loss of US$0.09 a share compares with net income of US$53.3 million, or US$0.09, a year earlier. Sales fell 33 percent to US$182.2 million from US$273 million, Chief Executive Terry Semel said on a conference call.
Semel, who replaced Tim Koogle in May, must find a way to turn around Yahoo's eroding revenue as more than a quarter of its advertisers are Internet companies. Hundreds of dotcoms have foundered since last year's decline in Web stocks. Yahoo's results, which met its earlier reduced forecasts, reassured some investors after Web advertising company DoubleClick Inc said Tuesday it doesn't see a recovery this year in online ad sales.
"Relative to DoubleClick, [Yahoo's results] sound pretty good," said Walter Price, a portfolio manager at Dresdner RCM Global Investors, which owns Yahoo shares. "What [Semel is] trying to do is focus the company on the areas that have the most promise: build a subscription base, get closer to their advertisers and get closer to their transaction partners."
Yahoo would have had a profit of US$8.71 million, or US$0.01 a share, excluding acquisition-related and restructuring costs, stock-based compensation and some other items. The Sunnyvale, California-based company said in April that it expected profit to be about break-even on that basis, which doesn't conform to generally accepted accounting principles.
Excluding the same items, Yahoo would have earned US$69.1 million, or US$0.11 a share, a year earlier.
"My intention is not to radically change the company but to enhance what it already does," Semel said on the conference call.
"There is no single event that will transform the company." Yahoo will pursue partnerships and joint ventures with other companies, make acquisitions and develop new services, Semel said on the call.
Semel, 58, is the former co-CEO of AOL Time Warner Inc's Warner Bros film studio. Analysts have speculated that he's likely to call on other media companies as he looks for partners and potential acquisitions.
"I think the well-worn cards in the Rolodex are the ones that come to the surface," said Jeff Fieler, an analyst at Bear, Stearns & Co who rates Yahoo shares a "buy."
Yahoo already is developing an online music service. The company agreed two weeks ago to acquire online music company Launch Media Inc for about US$12 million. And Yahoo agreed in April to distribute music online for Pressplay, an online music venture being developed by Sony Corp and Vivendi Universal SA, owners of two of the biggest music distributors.
Semel said he expects that the three other major music companies, AOL Time Warner, Bertelsmann AG and EMI Group Plc, will eventually license their music for distribution on Yahoo.
"At the appropriate time, each of the labels will want to license its music to all qualified parties and Yahoo will certainly be one of them," he said.
Along with entertainment services, Yahoo might develop new financial, communications and commerce services, Semel said.
The new services Yahoo will start will be "personalized" and "bundled," Semel said in an interview. Customers of Yahoo's financial services could be sold stock market information, banking services and online bill-paying in a package, for example.
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