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Fri, Jul 11, 2003 - Page 12 News List

Yahoo second-quarter profit doubles as ad sales rise

BLOOMBERG

Yahoo Inc, owner of the world's most-used Internet sites, said second-quarter profit more than doubled as sales of advertising increased.

Net income rose to US$50.8 million, or US$0.08 a share, from US$21.4 million, or US$0.03, in the year-earlier quarter, the Sunnyvale, California-based company said in a statement. Yahoo's profit, the highest in three years, fell short of some analysts' forecasts and the shares fell 6.1 percent in after-hours trading.

Revenue rose 42 percent to US$321.4 million, the most that Yahoo has ever generated in a quarter, chief executive Terry Semel said. The company is selling more advertising after Semel reorganized the ad-sales force into teams targeting different industries and started inserting ads into Internet search results.

"The optimistic investor out there is probably looking for US$0.09 or US$0.10" a share, said Paul Cook, director of technology investing at Munder Capital Man-agement in Michigan.

"It looks like advertising was as strong as we had hoped."

Munder Capital held 2.8 million Yahoo shares in March, according to public filings.

Some analysts had forecast that Yahoo would earn as much as US$0.09 a share, according to Thomson First Call. The profit matched the average analyst estimate of US$0.08 a share.

Yahoo raised its forecast for this year's revenue to as much as US$1.31 billion from a previous forecast of US$1.28 billion.

Yahoo "just finished the strongest revenue-producing quarter in the company's history," Semel said on a conference call with analysts. "There is mounting evidence that Yahoo's engine is operating on all cylinders."

Still, the this year's revenue forecast was less than some analysts' estimates of as much as US$1.33 billion.

Yahoo shares fell to US$33.13 at 6:30pm New York time after the earnings were released. Earlier the stock rose US$0.19 to US$35.29 in NASDAQ Stock Market trading. Yahoo shares have more than doubled this year.

Second-quarter revenue was higher than the US$315 million that the company forecast in April.

Semel has boosted revenue partly through a partnership with Overture Services Inc. to offer so-called sponsored search advertising, where a business can pay to have its Web listed at the top of Internet-search results.

Yahoo labels those search results as "sponsor" matches to distinguish them from search listings that businesses haven't paid to influence.

Overture, based in Pasadena, California, provides sponsored search listings to a group of Web sites that also includes CNN.com and Microsoft Corp's MSN.

Yahoo redesigned its search engine in April to try to take customers from rivals such as Google Inc, the world's most popular search engine.

Yahoo's collection of services, including international versions and consumer services such as dating and maps, make it the most-used group of Internet sites. It was used by 120.9 million consumers connected to the Web from their homes in May, according to research firm Nielsen/Netratings.

Yahoo said that both sponsored search and "traditional" Internet advertising, in boxes throughout the Yahoo Web sites, contributed to the rising sales.

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