Yahoo!’s profit report nothing to shout about

19 Jul 2006

Search engine Yahoo! has reported a 12pc decrease in second-quarter operating profits to US$230m, compared with US$261m a year ago. Sales and earnings per share failed to meet Wall Street analyst expectations.

The company revealed an increase in advertising sales as more business bought ads resulting in a 26pc increase in revenues to US$1.5bn. The company benefited from its status as the official internet partner for FIFA during the World Cup and this is attributed to a surge of visitors to the company’s site.

However, net income for the second quarter fell to US$164m, or 11 cents a share, down from US$755m, or 51 cents, a year ago.

The company also faces stiff competition from the world’s No 1 search giant Google, which manages to eke more profit from each search query.

It emerged also that Yahoo! is delaying the launch of its new advertising platform, codenamed Project Panama, until the end of this year.

Despite these setbacks, Yahoo! chief executive and chairman, Terry Semel, said he believed the company continued to make major strides during the quarter.

“Our ability to remain focused on our advertiser and consumer opportunities, while also continuing to innovate and take advantages of new opportunities in the marketplace, has put us in a great position,” Semel added.

In April, Yahoo! posted a 22pc fall in profits due to higher operating expenses and employee stock option costs. The company is in the process of creating 400 jobs in Dublin.

By John Kennedy