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Yahoo! meets, but may cut staff
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October 10, 2001: 6:06 p.m. ET
Company's results are in line, but executives lower the bar, will reorganize
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NEW YORK (CNNmoney) - Yahoo! on Wednesday reported third-quarter financial results that met Wall Street's expectations but fell sharply from the same period last year.
And executives of the Internet media company lowered the bar for the fourth quarter, and said they will be implementing a restructuring plan which could result in more job cuts.
After the closing bell, Yahoo! (YHOO: up $0.77 to $10.93, Research, Estimates) said it earned $8.4 million, or a penny per share, in the third quarter. That excludes restructuring charges and other onetime items and compares with an operating profit of 13 cents per share during the same quarter last year.
At $166.1 million, Yahoo!'s (YHOO: Research, Estimates) third-quarter revenue fell 43.8 percent from $295.6 million in the year-ago quarter.
The penny-per-share profit is in line with Wall Street's expectations, but the Street had expected revenue closer to $170 million, according to a survey conducted by earnings tracker First Call.
Yahoo! executives also lowered their financial targets for the current quarter, saying they now expect revenue to range between $160 million and $180 million, and its profit results to be between breakeven and a penny per share.
Analysts most recently had been looking for revenue nearer $190.8 million and a penny-per-share profit.
Acknowledging that it remains unclear when the economy will pick up and that advertising spending is closely tied to the overall economy, Terry Semel, the former Warner Brothers executive who replaced Tim Koogle as Yahoo!'s CEO earlier this year, took a longer-term view of Yahoo!'s prospects, saying that the steps the company takes in the coming months will put it in a strong position when an upturn does happen.
"When things begin to turn around, Yahoo! will have refined its capabilities, built out its offerings and services, introduced new and innovative methods and further developed our relationships with agencies and clients," Semel said in a teleconference Wednesday evening.
"Yahoo! has tremendous potential to take a great share of the online market," Semel added.
In response to a sharp slowdown in online advertising sales, Yahoo! has been re-examining its ad-supported business model, moving toward services aimed at businesses as well as more subscription-based consumer services.
Executives have also been taking a number of measures aimed at cutting costs, including: laying off hundreds of employees; discontinuing or reallocating some secondary services on its network of properties; decreasing discretionary marketing, distribution and promotional expenses; outsourcing some operations; and centralizing some businesses across its global organization.
Moving forward, Semel said the company will undergo additional restructuring, which may include additional job cuts, but he did not provide specifics.
During the third quarter, Semel said Yahoo's management team conducted a strategic review of all 44 of the company's business units and determined the key priorities around which the company will create enhanced new revenue streams in the coming quarters.
"We will be reorganizing the business around these key areas, and as we capitalize on our strengths and focus the business, this realignment may also result in a reduction of the total number of our employees," Semel said.
The company will begin to outline the details of its new restructuring plan at its analysts' meeting on Nov. 15.
While revenue and profit declined, Yahoo!'s popularity grew during the third quarter. The company said traffic increased to a record 1.25 billion page views per day on average during September 2001.
Yahoo! said its global audience grew to 210 million unique users during September 2001, up from 166 million in September 2000. A record 80 million active registered members logged into their personalized Yahoo! services during September 2001.
In the fourth quarter, Yahoo! is expecting revenue from its business and premium services to represent roughly 20 percent of total revenue and approach 20 percent for the full year. 
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