Yahoo Inc's profit slipped again in the second quarter, a recurring theme that has frustrated shareholders and raised doubts about the Internet company's future.
While the results released on Tuesday missed analyst expectations, the performance was not as bad as many investors had feared after Internet search and advertising leader Google Inc disappointed Wall Street with its second-quarter earnings last week.
What’s more, Yahoo management maintained its revenue outlook for the remainder of this year. The confident stance eased concerns about Yahoo’s financial erosion worsening amid the dreary economy in the US and parts of Europe.
Yahoo shares rebounded US$0.58 in extended trading after falling US$0.27 to finish Tuesday’s regular session at US$21.40.
“They did better than the worst expectations,” Canaccord Adams analyst Colin Gillis said. “It was a ‘rice-cracker’ quarter. It didn’t taste great, but it wasn’t totally horrible either.”
The Sunnyvale, California-based company earned US$131 million, or US$0.09 per share, from April through last month. That was down 18 percent from US$161 million, or US$0.11 per share, at the same time last year.
This was the ninth time in the past 10 quarters that Yahoo’s profit has ebbed from the previous year.
Analysts had projected earnings of US$0.11 per share in the most recent quarter, Thomson Financial said.
A big chunk of the earnings shortfall stemmed from the bills that piled up as Yahoo dealt with an unsolicited takeover bid from Microsoft Corp and a now-resolved battle for control of its board with activist investor Carl Icahn.
The drama cost Yahoo US$22 million in the second quarter, mainly for outside advisers and related legal defense costs. Coupled with its first-quarter expenses, Yahoo has now spent US$36 million on its wrestling match with Microsoft and Icahn.
Revenue for the quarter totaled US$1.8 billion, a 6 percent improvement from US$1.7 billion at the same time last year.
After subtracting commissions paid to Yahoo’s advertising partners, revenue stood at US$1.35 billion — about US$20 million below the average analyst estimate.
Ahead of Yahoo’s annual meeting on Aug. 1, chief executive Jerry Yang (楊致遠) was hoping shareholders would view the latest quarter as step in the right direction.
“This company is doing just fine in a tough economy and a tough environment,” Yang said in an interview on Tuesday. “We think there are a lot of good things to come still.”
Yang believes he can dramatically accelerate Yahoo’s revenue growth during the next two years by extending the reach of its own online marketing network and drawing upon Google’s superior technology to sell some ads on Yahoo’s Web site.
If the proposed partnership isn’t blocked by antitrust regulators, Yahoo hopes to start displaying some Google-generated ads in September. Management estimates the Google deal will boost Yahoo’s annual revenue by US$800 million.
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