LIVE: Yahoo Beats Q3 Earnings Forecasts; Q4 Outlook Up
Posted on October 20, 2009 |
Yahoo managed to beat third-quarter profit forecasts easily on slightly higher-than-expected revenues. Shares rallied in after-hours trading by about 3% 6% (the higher number coming as the conference call proceeds). Here's the press release.
Yahoo said it earned 13 cents a share on gross revenues of $1.58 billion, down 12% from a year ago, and net revenues of $1.13 billion. However, 5 cents of that profit came from the sale of Yahoo's stake in China's Alibaba.
That's still slightly ahead of forecasts. The company was expected to earn 7 cents a share on gross revenues of $1.52 billion, or $1.12 billion after payments to advertising partners. A year ago, Yahoo earned 4 cents a share on $1.33 billion in net revenues.
"With revenue coming in above our guidance and flat sequentially, we had a solid third quarter that signals our major businesses have stabilized," Yahoo! Chief Executive Carol Bartz said in a statement. "With new products like Yahoo! homepage, our brand revitalization campaign and expansion in the Middle East through Maktoob.com, our execution is improving and we’re focused on what we do best — being the center of people’s online lives."
Yahoo also said it expects gross revenues of $1.6 billion to $1.7 billion in the fourth quarter. Operating income before depreciation, amortization, and stock option costs is expected to be between $400 million and $450 million. Both of those are somewhat higher than Wall Street forecasts. Operating income after those costs is forecast at $135 million to $155 million.
Expectations were muted before the announcement. That was not only because the Internet portal was expected to report a drop in profits and sales. By now, everyone's also expecting online ad revenues, especially from the display ads that are Yahoo's mainstay revenue source, will fall for the first time since 2002.
Once the analyst call starts at 2 p.m. Pacific, I'll liveblog the highlights below. You also can view a Webcast of the call yourself and read the press release and earnings slides.
On the call, investors will be looking to see if Yahoo is seeing any signs of a turnaround in ad spending. Google reported a strong third quarter last week, spurring hopes that a rebound in search ads would lead to an uptick in display ads as well.
Investors also will be listening for insight on the impact of recent cost-cutting under Bartz. And they'll be looking for news on the status of the search deal with Microsoft, though given that it's unlikely to pass regulatory muster until well into next year, Yahoo probably won't have much to say.
And the call begins (SeekingAlpha has a more complete first-draft transcript):
