Yahoo meets expectations, dives into red in Q3

Yahoo Inc. dived deep into the red in its third quarter, but met analysts' expectations for pro forma earnings per share of US$0.01.

The company made a net loss of $24.1 million for the third quarter, down from a net profit of $47.7 million in the year-ago quarter, the company reported Wednesday after market close. In the second quarter this year it reported a net profit of $8.7 million.

Revenue for the quarter, at $166.1 million, had almost halved compared to a year ago, down from $295 million.

Pro forma figures supplied by the company -- excluding investment losses of $17.9 million, acquisition and restructuring charges, amortization of intangibles and stock compensation, some employer payroll taxes, and charges relating to a contract termination fee -- showed a profit on the quarter of $8.4 million, or earnings of $0.01 per share, down from $81.1 million or $0.13 per share for the same period last year. A Thompson Financial/First Call survey of analysts predicted earnings of $0.01 per diluted share and revenue of $170 million.

The market welcomed the news. In after-hours trading, Yahoo's stock (YHOO) climbed to $11.96, up 9.42 percent from the Wednesday market close of $10.93, according to the Nasdaq Web site.

Yahoo reported strong progression in audience figures over the year. A record 80 million active registered members logged on to Yahoo during September, and in the same month its global audience totaled 210 million unique users, up by about 27 percent year on year, the company said. Visitors generated 1.25 billion page views per day, the company reported.

The company predicted a slightly brighter outlook for the fourth quarter, with pro forma income in the fourth quarter expected to be between a loss of $5 million and a profit of $10 million, and pro forma earnings per share in the range from breakeven to $0.01. It expects revenue for the fourth quarter to remain steady at $160 million to $180 million, or $688 million to $708 million for the full year.

There is little sign that Yahoo is moving away from its traditional revenue source, advertising. "Approximately" 20 percent of revenue will come from business and premium services in the fourth quarter, with revenue "approaching" 20 percent for the full year from those sources, Yahoo said in a statement.

The company announced the appointment of a number of new executives on both sides of the revenue divide, including Chief Advertising Sales Officer Wenda Harris Millard and Senior Vice President of Business and Enterprise Services James A. Fanella. Fanella will lead the development of Yahoo's enterprise services, including Corporate Yahoo.

Yahoo plans to make capital expenditures of $15 million to 20 million in the fourth quarter, to bring its total for the year to $85 million to $90 million.

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Peter Sayer

PC World
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