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SAN FRANCISCO — Yahoo Inc.'s quarterly net profit fell 19 per cent but investors took heart it did not change its outlook despite a weakening U.S. economy and the distraction of Microsoft Corp.'s failed takeover bid.
Chief financial officer Blake Jorgensen said in an interview the Internet company was not changing its financial view for 2008, even though a difficult economic environment is weighing on online advertising.
“We are pretty pleased (with results), relative to both the distractions and the economy,” he said.
Yahoo shares rose close to 1 per cent in extended trading.
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“Clearly, it's telling us that these results are poor, but relative to what people were expecting, they're not so bad,” Jeffrey Lindsay, analyst at Sanford C. Bernstein, said of the market's response. “Investors braced for the worst.”
Yahoo, which just settled a proxy battle with activist investor Carl Icahn, said second-quarter net income fell to $131-million (U.S.), or 9 cents per diluted share, from $161-million, or 11 cents per share, a year earlier.
Excluding one-time items, profit was $139-million, or 10 cents per share, down from $163-million, or 12 cents per share, a year ago.
Gross revenue rose 6 per cent to $1.798-billion. Net revenue excluding payments to affiliated Web sites that carry Yahoo advertising services rose 8 per cent to $1.35-billion.
Wall Street analysts, on average, were looking for net revenue of $1.37-billion, according to Reuters Estimates.
Yahoo forecast third-quarter revenue of $1.78-billion to $1.98-billion and 2008 revenue of $7.35-billion to $7.85-billion. It projected operating income before depreciation, amortization and other items of $405-million to $465 million for the third quarter and $1.83-billion to $1.98-billion for the year.
“It looks like they tightened the (forecast) range,” said Colin Gillis, analyst at Canaccord Adams. “They didn't make any radical change, but it's going to be a stretch for them to exceed the numbers.”
Yahoo's earnings come a day after it agreed to appoint Mr. Icahn and two of his nominees to its board, ending a proxy battle that would have otherwise been decided at its Aug. 1 annual meeting, and reducing the chances of immediately revisiting a Microsoft deal.
Analysts said the Mr. Icahn settlement could buy some time for chief executive officer Jerry Yang and his management team to turn around Yahoo, which has been struggling for years to keep pace with rival Google Inc. But that reprieve could be limited if investors don't see a change in fortunes.
Yahoo shares rose to $21.60 after hours from its close of $21.40.
