Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

Yahoo profit grows

By Julianne Pepitone, staff reporter


NEW YORK (CNNMoney.com) -- Yahoo posted higher second-quarter earnings Tuesday that topped Wall Street expectations, but sales missed estimates.

The company said its net income for the second quarter rose 51% from last year, to $213 million. Excluding restructuring charges in both periods, Yahoo earned 15 cents a share in the latest quarter, up from 10 cents a year earlier.

Analysts polled by Thomson Reuters, who typically exclude one-time charges from their estimates, expected earnings of 14 cents per share.

Sales for the Sunnyvale, Calif., company rose 2% to $1.6 billion. But excluding traffic acquisition costs -- the advertising costs shared with partners -- Yahoo had sales of $1.13 billion. That missed analysts' forecast of $1.16 billion.

Display advertising on Yahoo's owned and operated sites grew 19% compared with last year. But those gains were partially offset by an 8% drop in search advertising revenue.

Yahoo (YHOO, Fortune 500) shares fell more than 6.5% in after-hours trading.

A leaner Yahoo: Yahoo has focused on streamlining under the leadership of Carol Bartz, who replaced company co-founder Jerry Yang in January 2009. In addition to its search tool, Yahoo offers products such as e-mail and personal ads.

But Bartz has said her mission is to make Yahoo a more focused company in order to better compete with rivals. Last week, Google (GOOG, Fortune 500) reported quarterly profit that rose from its year-ago results but missed Wall Street forecasts.

Search was "sluggish" over the entire second quarter, Bartz said in a conference call. But Yahoo's ad revenues are up, Bartz said, adding that Yahoo is tapped into the local ad market.

Bartz also cited success of new ad space on the Yahoo log-in page, which rolled out in June. General Motors ads "performed quite well" for the Malibu, Traverse and Equinox vehicles, Bartz said.

"With us you're buying an audience, not a site," she added. "We're targeting, and we give everyone a unique experience."

More than words: "Users want to go beyond just words on a screen," Bartz said on the call. They want video, they want a social aspect and they want it very personally tailored to them."

On the social front, Yahoo in the second quarter "deepened its integration with Facebook" through Yahoo! Pulse, which lets users link the two accounts and share updates with friends across both networks. The company also acquired Koprol, an Indonesian location-based social network, as well as Associated Content Inc.

Yahoo also made several moves in the mobile realm. The company launched a mail and messaging system for the Android mobile operating system, as well as HTML mail and news sites for the Apple (AAPL, Fortune 500) iPhone. Games from social company Zynga will be available on Yahoo. To top of page

Index Last Change % Change
Dow 17,689.86 -56.12 -0.32%
Nasdaq 5,128.28 -0.50 -0.01%
S&P 500 2,103.84 -4.79 -0.23%
Treasuries 2.20 -0.06 -2.78%
Data as of 7:48am ET
Company Price Change % Change
Bank of America Corp... 17.88 -0.25 -1.38%
Micron Technology In... 18.51 -1.39 -6.98%
Apple Inc 121.30 -1.07 -0.87%
Frontier Communicati... 4.72 0.09 1.94%
Ford Motor Co 14.83 -0.27 -1.79%
Data as of Jul 31
Sponsors

Sections

Some families are outraged at the sums they've been offered by Lufthansa as compensation for the Germanwings plane crash in March which killed 150 people. More

China's factories hit an unexpected speed bump in July, hiking concerns about slower growth in the world's second-largest economy. More

Luxury European automakers Audi, BMW and Daimler have teamed up to acquire Nokia's mapping and location services business for 2.8 billion euros ($3.1 billion). More

Fast-food chains that operate in more than 30 locations nationwide are the sole target of a new rule in New York to hike their minimum wage to $15. But consumers and small business owners, as well as some employees, may be the ones to pay the price. More

You can't blame it on the economy anymore. More Millennials now have jobs, but are still living at home. More