Yahoo! Inc. announced its fifth consecutive quarter of profitability as income more than doubled, and the internet bellwether boosted its income and sales forecasts for the rest of the year.
The Sunnyvale, California-based company, among the Web’s most visible brands, reported net income of $50,8-million, or 8 cents per share, in the second quarter. It earned $21,4-million, or 3 cents per share, in the same quarter of 2002.
The results matched an estimate of 8 cents per share on revenue of $315-million among analysts polled by Thomson First Call.
Net revenue for the second quarter was $321,4-million — a quarterly record and a 42% increase over the $225,8-million reported for the same period last year.
The 3 800-employee company credited its performance to a resurgence in internet advertising, as well as growth in the number of small and medium business owners who pay for services such as extra e-mail storage.
Yahoo executives also said on Wednesday that they were pleased with the conversion rate of customers from free e-mail and news services to fee-based services such as fantasy baseball and multiplayer games. The company also said it increased revenue from fees on auctions.
Meanwhile, Yahoo! boosted expectations for third quarter revenue to at least $318-million, and to at least $1,26-billion for the calendar year. It previously estimated full-year revenue between $1,14-billion and $1,21-billion.
Executives said they were bullish on new services, including the recently launched online personal and classified ads targeting the United Kingdom and Germany. Yahoo plans to launch an improved news service on Monday.
The outlook underscores how far Yahoo has come since the company hired Hollywood movie executive Terry Semel as its new leader two years ago. At the time, Yahoo’s fortunes were flagging, and in 2001 the company lost $92,8-million on revenue of $717-million.
After suffering another loss during the first three months of 2002, Yahoo has produced five consecutive profitable quarters.
Yahoo! built the comeback largely on advertisers willing to pay for prominent display in search results and subscribers who have been turning to the web portal for high-speed internet access.
”Each piece of our engine is working smoothly with the others, and the numbers show that over the last 18 months, our performance has been stronger and better,” Semel, Yahoo’s chairman and chief executive, said in a phone conference Wednesday.
Yahoo had 236-million registered users in the second quarter, including 116-million active users — up from 83-million active users in the same period last year. Active users are those most likely to become paying subscribers, spending between a few dollars a year and hundreds of dollars monthly for everything from fantasy sports to virtual document storage.
Semel said the company, widely maligned for promoting spam, filed four lawsuits during the second quarter against illegal marketers who flooded consumers’ e-mail boxes with commercial promotions.
Yahoo shares closed on Wednesday at $35,29, up 19 cents — and up a staggering 115,8% since the beginning of the year and just off the company’s 52-week high of $35,72. Shares tumbled $2,16 in after hours trading — a six percent drop prompted possibly by too-ambitious expectations for advertising, an analyst said.
”We heard so much about online advertising finally starting to see some momentum, and Yahoo did see that happening,” said Jeetil Patel of Deutsche Bank’s San Francisco office. ”But the unofficial expectations were even higher than anyone expected.”
Patel said it remains an open question whether Yahoo will be able to sustain its expensive share price.
The company’s biggest challenge may be retaining its price-to-earnings ratio, now at 146. By comparison, the widely used measure of Wall Street’s bullishness for companies is 31 for software giant Microsoft Corp. Online auction company eBay’s ratio is 113. – Sapa-AP