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Thu, Oct 19, 2006 - Page 10 News List

Yahoo posts third-quarter slump in profits

AFP , SAN FRANCISCO

Internet giant Yahoo posted a 37-percent slump in third-quarter profit on Tuesday and announced it would buy back up to US$3 billion worth of its stock.

The company said "unanticipated challenges" including stock-option expensing led to third-quarter net income of US$159 million, or US$0.11 a share, compared with US$254 million in the same period a year earlier.

"While we are tremendously excited about many things happening at Yahoo, we are not satisfied with our third-quarter financial performance," chief executive Terry Semel said in a statement.

Excluding payments to search-advertising partners, Yahoo's net revenue rose 20 percent from a year earlier to US$1.12 billion.

Analysts had expected US$0.11 per share profit, but on higher net revenue of US$1.14 billion.

Yahoo disappointed analysts anew by forecasting fourth-quarter revenue in a range of US$1.15 billion to US$1.27 billion, underperforming Wall Street investor targets of US$1.31 billion.

The company also said that it planned to repurchase up to US$3 billion worth of its outstanding common stock over the next five years, depending on factors including market conditions and the share price.

"I am not satisfied with our current financial performance and I intend to improve it," Semel said in a conference call with investors and reporters. "We are not exploiting our considerable strength as well as we should be and we are committed to do it better."

Semel announced Yahoo's new Project Panama platform for advertisers went live on Tuesday and "marked a significant turning point" in targeting advertising and would "unlock the potential" of its huge base of users.

The phasing-in of the Panama platform worldwide was expected to be completed early next year.

Semel vowed that Yahoo would be "laser-focused" on "closing the gap in monetizing services, widening the lead in graphical advertising, and seizing the lead in social media and mobile search."

"We believe now is the time to make investments in new audiences," Semel said. "Clearly some new players have emerged in these areas that have attracted a lot of attention, but Yahoo has been a pioneer in social media."

Yahoo bought Jumpcut online video editing Web site last month and this week announced a deal to channel CBS television news programs to its portal.

"Our goal is to make video as ubiquitous as text on Yahoo," Semel said. "We are moving quickly to forge partnerships with video producers."

Early on Tuesday Yahoo announced it bought video advertising specialty firm AdInterax and purchased a 20 percent stake in Right Media advertising exchange.

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