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October 22, 2009

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Layoffs lead to profit gain at Yahoo

YAHOO! Inc has pumped up its profits by laying off workers and weeding out unpopular Internet services.

Now Carol Bartz, Yahoo's third chief executive since June 2007, has to figure out how to boost the company's sagging Internet sales - a problem that could become easier to solve if the United States economy continues to recover from its worst recession in 70 years.

Yahoo's progress and challenges were both evident in third-quarter results released late on Tuesday. While the earnings for the July-September period more than tripled from the previous year, revenue slipped by at least 12 percent for the third straight quarter.

The revenue rut means Yahoo still has a long way to go on its comeback trail.

Investors, though, are betting Yahoo will continue to make strides under the no-nonsense Bartz, who was hired nine months ago to engineer a turnaround. That's something neither Yahoo's two previous CEOs, company co-founder Jerry Yang and former movie studio boss Terry Semel, could pull off.

Bartz indicated she believes her plans are starting to pan out.

"We had a solid third quarter that signals our major businesses have stabilized," she said in a statement.

Yahoo earned US$186 million, or 13 US cents a share, in the July-September quarter, compared with US$54 million, or 4 US cents a share, at the same time last year. The average estimate among analysts polled by Thomson Reuters was 7 US cents per share.

Shedding 2,000 jobs over the past year to reduce Yahoo's payroll to 13,200 employees accounted for some of the improvement. Yahoo also got a one-time lift of US$98 million from selling its stake in China's

Revenue for the period fell 12 percent to US$1.58 billion, from a 13 percent drop in the first six months of the year.



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