Yahoo hits earnings target but misses on revenue

Yahoo met earnings per share expectations but missed slightly on the revenue side for its second quarter, ended June 30, 2004.

Yahoo met earnings per share expectations but missed slightly on the revenue side for its second quarter, ended 30 June 2004.

Yahoo, which operates one of the world's largest web portals and makes money by selling online advertising and internet services, generated $609.1m (£328.5) in revenue, excluding traffic acquisition costs (TACs), which Yahoo defines as gross profit before other costs or revenue.

The consensus expectation from analysts polled by Thomson First Call was for $609.9m, according to a Thomson First Call spokesman.

Yahoo's TACs include payments the company makes to affiliates of its Overture unit, which sells "sponsored search" ads, or ads that are served based on the keywords a user enters when using a search engine. Yahoo acquired Overture in October 2003.

Yahoo's net income came in at $112.5m, or $0.08 earnings per share, meeting analysts' consensus expectation, the Thomson First Call spokesman said. This compared with net income of $50.8m, or $0.04 per share, in 2003's second quarter.

"In Q2, we delivered the best quarter in Yahoo's history," Terry Semel, Yahoo's chairman and chief executive officer, said during a conference call to discuss the results. "The past year has been a period of unprecedented growth, with this our fifth straight quarter of record revenues."

Semel said Yahoo has an "extremely healthy and diversified business model" and that its two core business, advertising and premium consumer services, are both performing very well. "Yahoo is clearly on the move," he said.

Semel said the earnings and revenue increases came thanks to Yahoo's continuing introduction of new products and services and enhancement of existing products and services.

"It's a win-win equation. With great products and services, we accomplish two things: We provide better choices to our existing consumers,  which encourages them to spend more time on Yahoo, using both our free and paid services. Second, these products and services act as a magnet to attract new consumers to our network," he said. "As this cycle continues, we expand our truly unique and effective advertising platform."

Juan Carlos Perez writes for IDG News Service

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