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Yahoo Releases Q3 2005 Earnings

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From the news release:
"Yahoo had another record quarter and continued to see solid growth across our business. We introduced a number of new and innovative products and services and continued to provide more effective means for advertisers to engage with consumers,” said Terry Semel, chairman and chief executive officer, Yahoo"

Summary via Dow Jones/Wall Street Journal

Yahoo Inc.'s revenue climbed with success in online advertising and premium services, though profit was flat when compared with a large investment gain a year earlier. Yahoo, of Sunnyvale, Calif., reported net income of $253.8 million, or 17 cents a share, about even with $253.3 million, or 17 cents a share, a year earlier, when Yahoo gained $129 million from the sale of Google shares. Revenue rose 47% to $1.33 billion from $906.7 million in the year-earlier period. Analysts surveyed by Thompson First Call were looking for earnings of 14 cents a share.

Basic Numbers, Q2 2005 via News Release Slides from conference call, here.
+ Net Income
Net income for the third quarter of 2005 was $254 million or $0.17 per diluted share (including a net impact of $16 million, or $0.01 per diluted share, related to the sales of investments). For the same period of 2004, net income was $253 million or $0.17 perdiluted share (including a net impact of $129 million, or $0.09 per share, related to the sale of an investment and an associated tax benefit).

+ Revenues
Revenues were $1,330 million for the third quarter of 2005, a 47 percent increase compared to $907 million for the same period of 2004. Revenues excluding traffic acquisition costs (?TAC?) were $932 million for the third quarter of 2005, a 42 percent increase compared to $655 million for the same period of 2004

+ Segments
United States revenues for the third quarter of 2005 were $923 million, a 41 percent increase from the $655 million reported for the same period of 2004.
? International revenues for the third quarter of 2005 were $407 million, a 62 percent increase from the $252 million reported for the same period of 2004.
? United States segment operating income before depreciation and amortization for the third quarter of 2005 was $306 million, a 37 percent increase from the $223 million reported for the same period of 2004.
? International segment operating income before depreciation and amortization for the third quarter of 2005 was $79 million, an 117 percent increase from the $36 million reported for the same period of 2004.

From Reuters

Yahoo Inc. the world's largest Internet media company, on Tuesday reported a a flat quarterly net profit that nonetheless topped Wall Street expectations as revenue surged from search and branded ads. In a statement, the Sunnyvale, California-based company raised its outlook for revenue and operating profits for the rest of 2005 by small margins.


Via CNN/Money

In a research note published following the release of Yahoo!'s results Tuesday, Piper Jaffray analyst Safa Rashtchy wrote that the quarter was "generally as expected" but that year-over-year growth in the company's marketing services division (basically its online advertising business, which includes keyword search ads in addition to banners, pop-ups and other forms of online marketing) was about 46 percent, a bit lower than the more than 50 percent growth rate that the division has posted in previous quarters.


A Few Key Quotes
"Search advertising is an important priority for Yahoo."
--Terry Semel, CEO

Re: Yahoo Search in Europe:
"We continue to pick up market share in some of the larger countries and continue to improve the product, improve the algorithm, distributed it better, distribute toolbars."
---Dan Rosenzweig, Yahoo COO

"Local search is already material from the searcher perspective, it's a large percentage of queries."
--Dan Rosenzweig, Yahoo COO

"Very strong, very healthy query gains, up double digits."
--Sue Decker, Yahoo CFO

On Clickthroughs and getting better tools to advertisers:
"Our plan there is to begin testing some of those initiative in the first-half of '06 with a broader rollout thereafter."
--Sue Decker, Yahoo CFO

On Integration of User Generated Content, Professional Content and ROI
"...Expenditures, they are not large. This is not a sprint. This is an ability for Yahoo to take the initiative position and start to evolve a whole new industry as it relates to media and media content. So, don't look for any one thing that's either going to be wildly expensive or any one thing that's going to to change the whole direction but look to a series of things, some of which will be generated by Yahoo, some of which will be be licensed and/or parterned with others as we've been doing in the past and a large portion of it will be user generated content that Yahoo will totally enable and give users an opportunity to use our tools, post them, move them around our network onto their buddy lists, or their families, or attach advertising links to it and give them the ability to create businesses if you will."
--Terry Semel, CEO

Postscript: 123Jump.com offers an in-depth look at the Yahoo 3Q Call.


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