Yahoo has reaped the benefits of Microsoft web search deal, posting its best quarterly performance since hiring Carol Bartz as chief executive to engineer a turnaround. The first-quarter results released marked the internet company’s first revenue growth in 18 months, although the gain of 1% fell shy of management and analyst hopes. The company’s shares […]
Yahoo has reaped the benefits of Microsoft web search deal, posting its best quarterly performance since hiring Carol Bartz as chief executive to engineer a turnaround. The first-quarter results released marked the internet company’s first revenue growth in 18 months, although the gain of 1% fell shy of management and analyst hopes. The company’s shares dropped by more than 3.5% in extended trading.
Earnings for January to March more than doubled as Yahoo’s plans to rely on Microsoft for its web search results and accompanying ads began to bear fruit. The savings and scheduled payments from the deal began to flow, even though the transition will not be complete until next year, after regulators approved the alliance in February.
22/04/2010
Microsoft’s net payments to Yahoo totalled $78 million (£50.7 million) in the first quarter. The company expects to get $75 million to $85 million a quarter from Microsoft for the rest of the year.
“We delivered what I would call a solid quarter,” said Bartz, 61, who became Yahoo’s CEO early last year to pull back the company from its financial woes under previous leaders Terry Semel and co-founder Jerry Yang.
While Yahoo’s fortunes sagged even more as the recession worsened last year, Bartz focused on cutting costs, forging the Microsoft partnership and polishing the company’s brand. The austerity measures helped lower Yahoo’s first-quarter operating expenses by 10%.
Yahoo earned $310.2 million (£201.7 million), or 22 cents a share, in the first quarter. That compared with income of $117.6 million, or eight cents a share, a year ago.
Revenue in the period totalled $1.6 billion (£1.04 billion), about $160 million more than last year.
Management had predicted a 3% increase in revenue, and analyst estimates fell in line with those forecasts. The company offered a second-quarter outlook that indicated revenue would rise by about 4%.
The first quarter was highlighted by a 20% increase in Yahoo’s display advertising, although total ad revenue increased by just 3%. That contrasted with a 21% increase in first-quarter ad revenue for Google.
www.yahoo.co.uk
