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Thu, Jul 20, 2006 - Page 10 News List

Yahoo's Q2 profits sink, but World Cup helps boost sales

AFP , SUNNYVALE, CALIFORNIA

Internet search engine Yahoo Inc on Tuesday reported a massive dive in second-quarter profits, sending its shares plunging despite a surge in sales on the back of the soccer World Cup.

Yahoo chief executive officer Terry Semel also revealed that the company would delay the launch of its new advertising platform, dubbed Project Panama, until the final quarter of this year.

Yahoo wanted to collect feedback from advertisers and minimize disruption when shifting to the new ad platform, Semel said, adding he didn't expect it to affect Yahoo financially until next year.

"As we got further along in the process, we wanted to make sure we did it right," Yahoo chief operating officer Dan Rosensweig said of Panama.

Yahoo's net income for the quarter to last month slumped 78 percent to US$164.3 million, or US$0.11 per share.

The figure was in line with Wall Street forecasts, after earnings in the equivalent quarter of last year were skewed by a windfall from the sale of Yahoo's stake in rival Google.

Yahoo also suffered from changes to stock option accounting rules this year which depressed its headline income.

And the Californian firm's sales surged 26 percent in the past quarter to US$1.58 billion, helped by higher traffic from viewers logging on to watch the World Cup soccer tournament online.

Investors, however, voted with their pocketbooks in reaction to the slump in Yahoo's net earnings. In after-hours trading, its shares sunk slightly more than 13.4 percent to US$27.90.

Nevertheless, Semel said the company was well-positioned for the rest of this year as it launches a revamped Web site in a bid to attract more traffic and advertisers.

Semel put a positive spin on Yahoo's prospects, touting its recent search page makeover, enhanced finance, photo and messenger services, and a deal that linked Yahoo and Microsoft instant messaging networks.

Yahoo expected its revenue growth for the year to be more than 25 percent and tally between US$4.6 billion and US$4.85 billion.

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