Yahoo Inc.’s profit slipped again in the second quarter, a recurring theme that has frustrated shareholders and raised doubts about the Internet company’s future.
While the results released Tuesday missed analyst expectations, the performance wasn’t as bad as many investors feared after Internet search and advertising leader Google Inc. disappointed Wall Street with its second-quarter earnings last week.
What’s more, Yahoo management maintained its revenue outlook for the remainder of 2008. The confident stance eased concerns about Yahoo’s financial erosion worsening amid the dreary economy in the United States and parts of Europe.
“They did better than the worst expectations,” said Canaccord Adams analyst Colin Gillis. “It was a ‘rice-cracker’ quarter. It didn’t taste great, but it wasn’t totally horrible either.”
Yahoo earned $131 million, or nine cents per share, from April through June. That was down 18% from $161 million, or 11 cents per share, at the same time last year.
Analysts had projected earnings of 11 cents per share in the most recent quarter, according to Thomson Financial.
A big chunk of the earnings shortfall stemmed from $22 million in bills that piled up as Yahoo dealt with an unsolicited takeover bid from Microsoft Corp. and a now-resolved battle for control of its board with activist investor Carl Icahn. Yahoo has now spent $36 million on its wrestling match with Microsoft and Icahn.
Revenue for the quarter totalled $1.8 billion, a 6% improvement from $1.7 billion at the same time last year.
After subtracting commissions paid to Yahoo’s advertising partners, revenue stood at $1.35 billion—about $20 million below the average analyst estimate.
Yahoo’s latest lacklustre performance of the past 2 1/2 years is likely to intensify the already tremendous pressure on management to lift the company’s long-slumping stock price after rebuffing Microsoft’s $47.5 billion takeover offer.
With that bid off the table, Yahoo’s market value is about $18 billion below Microsoft’s last offer. Dismayed shareholders will get their chance to vent at Yahoo’s annual meeting Aug. 1.
