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Yahoo suffers Q4 loss, but tops analyst views
Source: Agencies |
January 28, 2009, Wednesday
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YAHOO Inc. stumbled to a fourth-quarter loss of US$303 million, but the slumping Internet company withstood the recession better than analysts had expected.
In an expression of investors' relief, Yahoo's drooping shares picked up more than 5 percent after the results were released yesterday.
The fourth quarter closed the books on Yahoo co-founder Jerry Yang's fruitless 18-month stint as chief executive. The Sunnyvale, California-based company hired a new leader, Carol Bartz, two weeks ago in its latest attempt to orchestrate a turnaround.
Signaling there will be no quick fixes, Bartz told analysts in a yesterday conference call that she is trying to understand Yahoo's "very complex" organization as she plots a road map for 2009.
Yahoo is bracing for more bumps along the way. In its first-quarter forecast, management predicted the company's revenue may drop by as much as 16 percent from the same time last year. In a change from the company's past practices, Yahoo refrained from looking beyond March because the economy is so fragile.
Known for her blunt talk, Bartz made it clear she has no intention of selling Yahoo to former suitor Microsoft Corp., but left open the possibility of turning over Yahoo's search operations to Microsoft -- an alternative deal that has been bandied about for the past eight months.
"It's my job to make sure we look at anything that makes sense for the company and creates long-term value for shareholders," Bartz said during the one-hour call.
Just a few seconds later, Bartz indicated she would prefer to keep Yahoo intact so she can develop a strategy for mining more profit from its worldwide audience of 500 million users.
"This is not a company that needs to be pulled apart and left for the chickens," she said.
Yahoo's fourth-quarter loss translated into 22 cents per share. It compared with a profit of 15 cents per share in the year-ago period, when Yahoo earned US$206 million.
The setback wasn't as bad as it appeared because the loss stemmed from charges taken to cover the diminishing value of Yahoo's European operations and cutbacks that included laying off 1,500 employees last month. Yahoo said it expects to incur an additional US$5 million to US$10 million in charges this year to complete the payroll purge started last year.
If not for the fourth-quarter charges of about US$600 million, Yahoo said it would have earned 17 cents per share -- a figure that would have improved upon the prior year's results, a rarity during the company's three-year slump. And it beat the estimate for 13 cents per share by analysts surveyed by Thomson Reuters. The analysts didn't include the one-time charges in their forecasts.
Revenue for the period dipped 1 percent to US$1.81 billion, though Yahoo said it would have risen 3 percent if not for currency fluctuations. After subtracting the company's advertising commissions, Yahoo's revenue totaled US$1.37 billion, matching analyst estimates.
For all of 2008, Yahoo earned US$424 million, or 29 cents per share, on revenue of US$7.2 billion. That compared with income of US$660 million, or 47 cents per share, on revenue of US$7 billion in 2007.
Given the long-running deterioration in Yahoo's earnings, investors were bracing for another disappointing performance in the fourth quarter as the dismal economy discouraged spending on Internet ads _ the company's main source of revenue.
But Yahoo's ad revenue of US$1.59 billion remained largely unchanged from a year ago.
The pleasant surprise, coupled with Bartz's pledge to shake things up, encouraged investors. Yahoo shares gained 60 cents, or 5.3 percent, in extended trading, after finishing the regular session at US$11.34, up 17 cents.
The rally baffled Sanford Bernstein analyst Jeffrey Lindsay. "There really wasn't that much to cheer about here," he said. "I think people are averting their eyes to the fact that this business is still really diminishing."
Yahoo's performance in the quarter wasn't as impressive as that of Internet ad leader Google Inc., whose fourth-quarter revenue rose 18 percent. Still, the showing was enough to raise hopes that Yahoo can regain its stride with Bartz promising to crack the whip.
"I'm telling you, there are some really smart people here and they really are motivated to work for a top-notch company," Bartz said. "They just need a little help in their lines of communication and channels and so forth. And the good news is that I happen to be pretty good at that kind of stuff."
Bartz nevertheless started her reign with a cautious outlook. Yahoo predicted its first-quarter revenue will range from US$1.53 billion to US$1.73 billion, a decline from US$1.82 billion at the same time last year. The company didn't project its earnings for the quarter.
In an expression of investors' relief, Yahoo's drooping shares picked up more than 5 percent after the results were released yesterday.
The fourth quarter closed the books on Yahoo co-founder Jerry Yang's fruitless 18-month stint as chief executive. The Sunnyvale, California-based company hired a new leader, Carol Bartz, two weeks ago in its latest attempt to orchestrate a turnaround.
Signaling there will be no quick fixes, Bartz told analysts in a yesterday conference call that she is trying to understand Yahoo's "very complex" organization as she plots a road map for 2009.
Yahoo is bracing for more bumps along the way. In its first-quarter forecast, management predicted the company's revenue may drop by as much as 16 percent from the same time last year. In a change from the company's past practices, Yahoo refrained from looking beyond March because the economy is so fragile.
Known for her blunt talk, Bartz made it clear she has no intention of selling Yahoo to former suitor Microsoft Corp., but left open the possibility of turning over Yahoo's search operations to Microsoft -- an alternative deal that has been bandied about for the past eight months.
"It's my job to make sure we look at anything that makes sense for the company and creates long-term value for shareholders," Bartz said during the one-hour call.
Just a few seconds later, Bartz indicated she would prefer to keep Yahoo intact so she can develop a strategy for mining more profit from its worldwide audience of 500 million users.
"This is not a company that needs to be pulled apart and left for the chickens," she said.
Yahoo's fourth-quarter loss translated into 22 cents per share. It compared with a profit of 15 cents per share in the year-ago period, when Yahoo earned US$206 million.
The setback wasn't as bad as it appeared because the loss stemmed from charges taken to cover the diminishing value of Yahoo's European operations and cutbacks that included laying off 1,500 employees last month. Yahoo said it expects to incur an additional US$5 million to US$10 million in charges this year to complete the payroll purge started last year.
If not for the fourth-quarter charges of about US$600 million, Yahoo said it would have earned 17 cents per share -- a figure that would have improved upon the prior year's results, a rarity during the company's three-year slump. And it beat the estimate for 13 cents per share by analysts surveyed by Thomson Reuters. The analysts didn't include the one-time charges in their forecasts.
Revenue for the period dipped 1 percent to US$1.81 billion, though Yahoo said it would have risen 3 percent if not for currency fluctuations. After subtracting the company's advertising commissions, Yahoo's revenue totaled US$1.37 billion, matching analyst estimates.
For all of 2008, Yahoo earned US$424 million, or 29 cents per share, on revenue of US$7.2 billion. That compared with income of US$660 million, or 47 cents per share, on revenue of US$7 billion in 2007.
Given the long-running deterioration in Yahoo's earnings, investors were bracing for another disappointing performance in the fourth quarter as the dismal economy discouraged spending on Internet ads _ the company's main source of revenue.
But Yahoo's ad revenue of US$1.59 billion remained largely unchanged from a year ago.
The pleasant surprise, coupled with Bartz's pledge to shake things up, encouraged investors. Yahoo shares gained 60 cents, or 5.3 percent, in extended trading, after finishing the regular session at US$11.34, up 17 cents.
The rally baffled Sanford Bernstein analyst Jeffrey Lindsay. "There really wasn't that much to cheer about here," he said. "I think people are averting their eyes to the fact that this business is still really diminishing."
Yahoo's performance in the quarter wasn't as impressive as that of Internet ad leader Google Inc., whose fourth-quarter revenue rose 18 percent. Still, the showing was enough to raise hopes that Yahoo can regain its stride with Bartz promising to crack the whip.
"I'm telling you, there are some really smart people here and they really are motivated to work for a top-notch company," Bartz said. "They just need a little help in their lines of communication and channels and so forth. And the good news is that I happen to be pretty good at that kind of stuff."
Bartz nevertheless started her reign with a cautious outlook. Yahoo predicted its first-quarter revenue will range from US$1.53 billion to US$1.73 billion, a decline from US$1.82 billion at the same time last year. The company didn't project its earnings for the quarter.
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