Yahoo earnings: Ad biz jumps, search drops

yahoo stockClick the chart for more on YHOO. By Julianne Pepitone, staff reporter


NEW YORK (CNNMoney) -- Yahoo reported first-quarter sales and earnings in line with Wall Street's expectations, though net income slid 6% compared to last year.

Display ad revenue was a bright spot in the report, but search figures continued to drop significantly.

Net earnings came in at 17 cents per share, excluding one-time costs. Analysts polled by Thomson Reuters were expecting 16 cents a share.

Excluding traffic acquisition costs -- revenue shared with partners -- Yahoo (YHOO, Fortune 500) had sales of $1.06 billion, exactly in line with estimates. That was a 6% decline from the first quarter of 2010.

Yahoo attributed that drop in part to the sizeable chunk of its sales that it hands over to Microsoft (MSFT, Fortune 500), whose Bing technology underpins Yahoo's search site.

Yahoo expects its second-quarter 2011 revenue to come in between $1.08 billion and $1.13 billion.

Shares rose 2.9% in after-hours trading following the report.

Advertising and search: Yahoo has lost market share in display advertising -- once its biggest stronghold -- to rivals Google (GOOG, Fortune 500) and Facebook.

But Tuesday's report showed Yahoo's display ad business jumped 10% over the year to $471 million. On last quarter's conference call with analysts, Yahoo CEO Carol Bartz said people "hear a lot of hype about Facebook because they have a lot of little impressions, but we focus on display revenue."

First-quarter search revenue, however, plummeted 19% year-over-year to $357 million.

On Tuesday's conference call, Bartz dismissed the decline and called it a "funky comparison" due to the Microsoft search alliance deal.

"We told you there would be major revenue comparison headwinds in 2011," she said. "But those comparisons will get clearer."

Concerns over increasingly anemic search numbers have punished Yahoo's stock. Shares are down more than 12% over the past 12 months, though they started picking up in September -- the stock is off only 3.1% year-to-date.

Last month, Yahoo shares jumped on rumors that the company was in late-stage talks to transfer its 35% stake in Yahoo Japan to Softbank Corp.

Bartz has received praise for aggressive cost-cutting and for landing the Bing search deal, but the overall company turnaround has been slow. Several senior managers have fled Yahoo over the past year.

She took the helm from Yahoo co-founder Jerry Yang, who was the company's CEO until 2008. Yang stepped down amid shareholder anger after Yahoo snubbed a $47.5 billion buyout deal from Microsoft. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 17,265.99 109.14 0.64%
Nasdaq 4,593.43 31.24 0.68%
S&P 500 2,011.36 9.79 0.49%
Treasuries 2.63 0.00 0.00%
Data as of 8:34am ET
Company Price Change % Change
Bank of America Corp... 17.04 0.27 1.61%
Yahoo! Inc 42.08 -0.50 -1.19%
Apple Inc 101.79 0.21 0.21%
Microsoft Corp 46.68 0.16 0.34%
General Electric Co 26.21 0.16 0.61%
Data as of Sep 18

Sections

Online furniture retailer Made was in such a hurry to win business in a new Scotland, it pushed out the wrong email to customers. More

The Federal Reserve is probably not going to raise interest rates until the summer of 2015 at the earliest. More

Immigrant entrepreneurs leverage connections abroad to boost international exports -- and non-immigrants could stand to learn from their tactics. More

A 10,000 square-foot home doesn't take care of itself, and many of the uber wealthy families who own them don't want to tend to them either. So they hire people like Bryan Peele. Here are journal entries from a day in his life. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.