Yahoo Q2 net income down, lowers Q3 and 2007 guidance

Makes US$1.244 billion in sales for the quarter

Yahoo net income fell year-over-year in a quarter that saw Yahoo leadership change hands amid criticism that the company failed to capitalize on the explosive growth of the search-engine advertising market.

Yahoo also lowered guidance for the third quarter and for 2007 as it reported financial results Tuesday.

Revenue excluding traffic acquisition costs for Yahoo's second quarter ended June 30 were US$1.244 billion, slightly higher than the US$1.242 billion Thomson First Call analysts had estimated. Net income for the quarter was US$161 million or US$0.11 per share, in line with analyst estimates and slightly lower than the US$164 million or US$0.11 per share for the same period in 2006.

Operating income for the second quarter of 2007 was US$185 million, a 19 percent decrease compared to US$230 million for the same period of 2006. Cash flow from operating activities for the second quarter of 2007 was US$406 million, a 6 percent decrease compared to US$430 million for the same period of 2006.

Tuesday marks the first time co-founder Jerry Yang faces investors for an earnings period since taking over the CEO position on June 18, when former CEO Terry Semel stepped down. The new CEO is in the position of convincing Wall Street he has what it takes to improve performance at Yahoo, and he took an aggressive stance in a press statement ahead of the company's quarterly conference call.

"I am focused on doing everything we need to do to strengthen our business, capture long-term growth opportunities and create increased value for our shareholders," Yang said, according to the statement. "By sharpening our focus, speeding execution, building our technology and talent, and investing in key growth areas, we can put Yahoo on a clear path to fulfill its potential as an Internet leader."

Yahoo also offered new, lowered guidance for its third quarter and year-end results. Wall Street expected US$1.304 billion in revenue for the third quarter, but Yahoo said Tuesday that revenue would be in the range of US$1.17 billion to 1.31 billion. Third-quarter earnings before interest, taxes, depreciation and amortization (EBITDA) are now expected to be in the range of US$380 million to US$450 million rather than the US$521 million Wall Street is currently expecting.

For 2007, Yahoo is now expecting revenue of US$4.89 billion to US$5.19 billion rather than Wall Street's current guidance of US$5.199 billion. EBITDA for 2007 is expected to be in the range of US$1.775 billion to US$1.955 billion rather than the current guidance of US$2.063 billion, according to Yahoo.

On a conference call Tuesday, Yang acknowledged he is doing a "top-to-bottom review" of Yahoo's business.

"There is s significant gap between where we are and where we need to be," he said, adding that it is with a "great sense of urgency" that he plans to evaluate Yahoo's business so the company can improve financial results quickly.

Some areas on which Yahoo will put more emphasis are display advertising, its publisher network and its online partnerships through its newspaper consortium, said Yahoo President Susan Decker, who was promoted to her current position when Yang took over as CEO. Previously, she was executive vice president and head of the Advertiser and Publisher Group.

Yang named cultivating a new employee culture of "teamwork, leadership and the desire to win" as a key objective in the near term. That initiative would include more hiring and changes in the executive ranks, he said.

Another aim is to speed up Yahoo's plan to trim fat and focus on core businesses such as online advertising, as well as to help its customers and advertisers build upon Yahoo's Web-based services platform. The company also has to make decisions faster, executives said.

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.

Elizabeth Montalbano

IDG News Service
Show Comments


James Cook University - Master of Data Science Online Course

Learn more >




Back To Business Guide

Click for more ›

Most Popular Reviews

Latest Articles


PCW Evaluation Team

Christopher Low

Brother RJ-4230B

This small mobile printer is exactly what I need for invoicing and other jobs such as sending fellow tradesman details or step-by-step instructions that I can easily print off from my phone or the Web.

Aysha Strobbe

Microsoft Office 365/HP Spectre x360

Microsoft Office continues to make a student’s life that little bit easier by offering reliable, easy to use, time-saving functionality, while continuing to develop new features that further enhance what is already a formidable collection of applications

Michael Hargreaves

Microsoft Office 365/Dell XPS 15 2-in-1

I’d recommend a Dell XPS 15 2-in-1 and the new Windows 10 to anyone who needs to get serious work done (before you kick back on your couch with your favourite Netflix show.)

Maryellen Rose George

Brother PT-P750W

It’s useful for office tasks as well as pragmatic labelling of equipment and storage – just don’t get too excited and label everything in sight!

Cathy Giles

Brother MFC-L8900CDW

The Brother MFC-L8900CDW is an absolute stand out. I struggle to fault it.

Luke Hill


I need power and lots of it. As a Front End Web developer anything less just won’t cut it which is why the MSI GT75 is an outstanding laptop for me. It’s a sleek and futuristic looking, high quality, beast that has a touch of sci-fi flare about it.

Featured Content

Product Launch Showcase

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?