Yahoo profits slump 37%
San Francisco - Internet giant Yahoo posted a 37% slump in third-quarter profit on Tuesday and announced it would buy back up to $3bn worth of its stock.
The company said "unanticipated challenges" including stock-option expensing led to third-quarter net income of $159m, or 11 cents a share, compared with $254m in the same period a year earlier.
"While we are tremendously excited about many things happening at Yahoo, we are not satisfied with our third-quarter financial performance," chief executive Terry Semel said in a statement.
Excluding payments to search-advertising partners, Yahoo's net revenue rose 20% from a year earlier to $1.12bn.
Analysts had expected the 11c per share profit, but on higher net revenue of $1.14bn.
Big share buy-back
Yahoo disappointed analysts anew by forecasting fourth-quarter revenue in a range of $1.15bn to $1.27bn, underperforming Wall Street investor targets of $1.31bn.
The company also said that it planned to repurchase up to $3bn worth of its outstanding common stock over the next five years, depending on factors including market conditions and the share price.
"We believe Yahoo shares are halfway through a bottoming phase," an RBC Capital Markets analysis concluded, adding the stock would tread water because the weakness revealed on Tuesday had already been factored into the price.
Yahoo had ample free cash reserves and was valued in line with other media companies, according to RBC.
Not exploiting strength
While Yahoo is the largest online search portal, with 325 million users, it has had problems fully cashing in on those visitors, RBC reported.
"I am not satisfied with our current financial performance and I intend to improve it," Semel said in a conference call with investors and reporters.
"We are not exploiting our considerable strength as well as we should be and we are committed to do it better."
Semel announced Yahoo's new Project Panama platform for advertisers went live on Tuesday and "marked a significant turning point" in targeting advertising and would "unlock the potential" of its huge base of users.
Moving into video
The phasing-in of the Panama platform worldwide was expected to be completed early next year.
Yahoo bought Jumpcut online video editing website in September and this week announced a deal to channel CBS television news programs to its portal.
"Our goal is to make video as ubiquitous as text on Yahoo," Semel said. "We are moving quickly to forge partnerships with video producers."
Early on Tuesday Yahoo announced it bought video advertising specialty firm AdInterax and purchased a 20% stake in Right Media advertising exchange.
News source: www.news24.co.za
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