Yahoo closed the books on a tough year on Tuesday, reporting that its sales rebounded in the fourth quarter from an especially sluggish third quarter and promising investors that it would soon turn on technology that it hoped would close the widening gap with Google.
Its fourth-quarter profits were down from a year ago when it had investment gains, however, and it predicted only modest improvements for this year, suggesting that Yahoo would continue to struggle to keep up with Google.
Yahoo executives were upbeat enough, however, that Yahoo's shares rose by 5.8 percent, or US$1.57, in after-hours trading, to US$28.53. They had fallen US$0.46, to US$26.96 in regular trading.
Of most significance to investors, Yahoo said it would begin the second phase of its long-delayed search advertising system, called Project Panama, on Feb. 5. On that day, it will start displaying advertising on search pages in the order in which its computers estimate it will make the most money.
Search advertisers bid the price they are willing to pay each time a user clicks to visit their Web sites. Yahoo now shows the highest bid first, a method that analysts say earned it only 60 percent as much on each search as Google's more sophisticated formula. Terry Semel, Yahoo's chief executive, said the company would reap the rewards of the new system -- but slowly.
"The first time we see any benefit will be at the end of the second quarter," he said in an interview on Tuesday. "Every quarter thereafter we will start to get better."
Semel said Yahoo would not see the full impact until next year, when the system will be expanded to international markets.
In the fourth quarter, Yahoo earned US$268.7 million, or US$0.19 a share, down from US$683.2 million, or US$0.46 a share, in the period a year earlier. In the fourth quarter of 2005, Yahoo's earnings were buoyed by US$408 million in accounting adjustments relating to the sale of its Chinese unit and some tax changes. Excluding those adjustments and some expenses related to stock-based compensation, Yahoo's fourth-quarter income last year was US$296.5 million, up 15 percent from the year before.
Yahoo predicted another slow year of growth. The company's revenue, after deducting payments it makes to Web sites that display the ads it sells, was US$4.56 billion for last year, an increase of 23 percent over 2005. The growth was slower than the company had predicted at this time last year. For next year, it predicts net revenue of US$4.95 billion to US$5.45 billion, an increase of 8.6 percent, to 20 percent.
It also expects the growth rate in operating cash flow, a measure of profitability, to slow as well.
By contrast, Google is expected to announce next week that its net revenue was up 85 percent last year, to US$7.45 billion. And analysts expect its net revenue to increase 48 percent this year.
For the fourth quarter, Yahoo reported revenue, excluding payments to other sites, of US$1.23 billion, up 15 percent. Yahoo's revenue was slightly higher than analysts' expectations of US$1.22 billion. Its per-share earning of US$0.19 in the quarter was well ahead of the US$0.13 expected by Wall Street.
FORCED LABOR: Customs officials have seized a 11.8 tonne shipment of products made from human hair on suspicion they were produced by people facing human rights abuses Federal authorities in New York City on Wednesday seized a shipment of weaves and other beauty accessories suspected to be made out of human hair taken from people locked inside a Chinese internment camp. US Customs and Border Protection (CPB) officials said that 11.8 tonnes of hair products worth an estimated US$800,000 were in the shipment. “The production of these goods constitutes a very serious human rights violation, and the detention order is intended to send a clear and direct message to all entities seeking to do business with the United States that illicit and inhumane practices will not be tolerated in
JUST QUESTIONS: Expelled reporter Ai Kezhu said that every member of Southeast Television had complied with the law and had not appeared on any talk shows Two Chinese reporters yesterday left Taiwan after the government revoked their accreditation and ordered them to leave amid a probe into allegations that several Chinese media outlets have set up studios and produced political talk shows in Taiwan. The two reporters — Ai Kezhu (艾珂竹) and Lu Qiang (盧薔) — worked for Fujian Province-based Southeast Television and arrived in Taiwan in December last year. The Mainland Affairs Council has launched an investigation after local media reported that Chinese broadcasters — including China Central Television, Southeast Television and FJTV — had set up studios in Taipei and produced political talk shows. Council Deputy Minister
UPTICK IN NUMBERS: The Taipei deputy mayor said the city has services to assist new immigrants, but has established an office specifically to help those from Hong Kong The Taiwan-Hong Kong Services and Exchanges Office today officially opens, where it is to provide humanitarian assistance to Hong Kongers, after Beijing yesterday passed a controversial national security law for the territory. President Tsai Ing-wen (蔡英文) expressed dismay over China’s passage of the law, saying that Beijing has broken its pledge to allow Hong Kong to maintain a high degree of autonomy for at least 50 years following its handover from the UK. “I feel extremely disappointed [about the law’s passage], which means China did not keep its promise to Hong Kong,” Tsai said in Taipei. Beijing’s “broken promise” also
PROBE LAUNCHED: An officer who served as a supervisor in the drill died in an apparent suicide after the accident, which was caused by unexpected waves Two marines who were on Friday injured in a military exercise in the waters off Kaohsiung passed away yesterday, Navy Command said. The marines — surnamed Tsai (蔡), 26, and a sergeant surnamed Chen (陳), 36 — were in a seven-member Marine Corps team that encountered rough seas during a simulated response to enemy forces landing on Taiwan. Their rubber craft overturned in waters off Taoziyuan (桃子園) beach in Zuoying District (左營), injuring four of the marines. They were rushed to hospital, where three of them — Tsai, Chen and a 34-year-old sergeant — were taken to an intensive care unit