Yahoo misses Q2 revenue target, delays ad system

Yahoo's second-quarter revenue fell short of Wall Street's expectations but the company met the analysts' earnings per share consensus forecast.

Yahoo's revenue grew 26 percent compared with last year's second quarter, totaling US$1.58 billion for the period, which ended June 30. Excluding the commissions Yahoo pays to third-party Web sites that belong to its advertising network, the company had revenue of US$1.12 billion, up 28 percent but below the US$1.14 billion consensus expectation from analysts polled by Thomson Financial.

Meanwhile, net income came in at US$164.3 million, or US$0.11 per share, in line with analysts' expectations. This compares with net income of US$754.7 million, or US$0.51 per share, in last year's second quarter, the company announced Tuesday.

The revenue miss wasn't the only piece of bad news Yahoo delivered. Its highly-anticipated new advertising platform, called Project Panama, is delayed and will not go live in the third quarter as previously planned.

Yahoo's Chairman and Chief Executive Officer Terry Semel said the company is now shooting for the fourth quarter. Chief Financial Officer Susan Decker said no positive financial effects should be expected from its rollout until next fiscal year, which begins January 1.

"To meet the standards we believe our clients should expect from us, it's prudent to add some extra time to our original estimates before the commercial launch," Semel said during a conference call. "This is the right decision to ensure the most successful commercial launch possible."

Yahoo executives have been loudly touting Project Panama for months, saying the new system will give Yahoo an edge in search-based advertising where it competes head-to-head with Google and Microsoft. They have also said the system will give a significant boost to the company's ad sales.

The underlying technology platform is done, but Yahoo is still working with partners so that they can adapt their systems to Project Panama, Semel said. Yahoo is also still conducting quality assurance testing on the new system.

Dan Rosensweig, Yahoo's chief operating officer, said the Project Panama delay wasn't caused by technical bugs and glitches, but simply by a realization that more time is needed to properly finish the implementation.

Excluding Yahoo China, Yahoo ended the quarter with 412 million unique users, compared with 321 million in 2005's second quarter. Of the 412 million, 208 million were active registered users, or users who have signed up for at least one Yahoo service, such as e-mail, and who visit the Yahoo network at least once per month. Active registered users were up from 174 million in 2005's second quarter.

Among the active registered users, 14.3 million were fee-paying users, defined as those who pay for at least one Yahoo service. This was up from 10.1 million. Daily average page views increased 33 percent to 3.94 billion. Meanwhile, Yahoo finished the quarter with 10,500 employees, up from 8,300 in 2005's second quarter.

Looking ahead, Yahoo expects revenue, excluding commissions, to be in the range of US$1.11 billion to US$1.22 billion next quarter, and between US$4.60 billion and US$4.85 billion for the full fiscal year.

Join the newsletter!


Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.
Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Juan Carlos Perez

IDG News Service
Show Comments

Brand Post

Most Popular Reviews

Latest Articles


PCW Evaluation Team

Andrew Teoh

Brother MFC-L9570CDW Multifunction Printer

Touch screen visibility and operation was great and easy to navigate. Each menu and sub-menu was in an understandable order and category

Louise Coady

Brother MFC-L9570CDW Multifunction Printer

The printer was convenient, produced clear and vibrant images and was very easy to use

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Walid Mikhael

Brother QL-820NWB Professional Label Printer

It’s easy to set up, it’s compact and quiet when printing and to top if off, the print quality is excellent. This is hands down the best printer I’ve used for printing labels.

Ben Ramsden

Sharp PN-40TC1 Huddle Board

Brainstorming, innovation, problem solving, and negotiation have all become much more productive and valuable if people can easily collaborate in real time with minimal friction.

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Featured Content

Product Launch Showcase

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?