Yahoo! earnings climb but revenue stays modest

SAN FRANCISCO: Yahoo! Inc’s turnaround effort wavered in the second quarter as the Internet company’s lacklustre revenue growth overshadowed a surge in net income.

The results released yesterday could cause some investors to doubt the strategy of Yahoo!’s no-nonsense CEO, Carol Bartz, who was hired 18 months ago to lead the company out of a prolonged financial funk that has depressed its stock.

Bartz has been able to boost Yahoo!’s earnings by cutting costs, but so far hasn’t been able to produce dramatic revenue gains.

Yahoo!’s second-quarter revenue growth of 2% was particularly disappointing, given that Google Inc last week announced its revenue surged 24% in the same period.

Both Google and Yahoo! make virtually all of their money from online advertising, a sector that has been recovering from a recession more quickly than other forms of marketing.

The challenges facing Yahoo! are similar to those at many other companies that have been fattening their bottom lines by trimming expenses while revenue remains lean.

“We still have plenty of work to do,” Tim Morse, Yahoo!’s chief financial officer, said in an interview yesterday.

He said the second quarter looked fairly strong until June when several large advertisers suddenly reduced their spending. “That has made us incrementally more cautious,” Morse said.

Reflecting that circumspect mood, Yahoo! predicted its third-quarter revenue would either remain unchanged from last year or increase by as much as 4%.

The company earned US$213mil (RM724mil), or 15 cents (51sen) per share, in the three months ending in June. That represents a 51% increase from net income of US$141mil (RM479mil), or 10 cents (34sen) per share, at the same time last year. — AP

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