Kara Swisher

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Yahoo Earnings Beat Low Expectations (It's a Good Thing the Homepage Redo Is Pretty)

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Yahoo reported so-so second-quarter earnings results today, with a decline in revenue, but with a slightly stronger-than-expected improvement in net income.

For the three months ended June 30, the Internet giant said it had revenue of $1.14 billion, excluding traffic-acquisition costs, down from $1.35 billion in the same period a year ago (click on the revenue chart to make it larger).

Profit was up eight percent, due to cost-cutting. The Sunnyvale, Calif.-based Yahoo said it earned $141.4 million, or 10 cents a share, in the quarter, compared to $131.2 million, or nine cents.

But that’s not really saying much since Wall Street analysts had such low expectations, estimating Yahoo would earn eight cents. But, with a weak online advertising market in a bad economy, it is also not that bad.

But Yahoo (YHOO) CEO Carol Bartz will take it for now, especially since the company still makes a lot of money, especially compared to the vast number of Silicon Valley competitors–leaving out Google (GOOG), of course.

Plus Yahoo has money to burn, with $4.2 billion in cash in the bank and marketable securities.

Here’s the Yahoo press release, minus the charts, some boring explanatory stuff and legalese (which can be found here in its entirety):

YAHOO! REPORTS SECOND QUARTER 2009 RESULTS

Company Exceeds Midpoint of Revenue Outlook Range Maintains Strong Balance Sheet with over $4 Billion in Cash and Marketable Debt Securities

SUNNYVALE, Calif., July 21, 2009–Yahoo! Inc. (NASDAQ: YHOO) today reported revenues of $1,573 million for the quarter ended June 30, 2009, a decrease of 13 percent from the second quarter of 2008. Excluding the impact of currency rate fluctuations, revenues for the second quarter of 2009 would have declined 8 percent from the second quarter of 2008.

Net income per diluted share for the second quarter of 2009 was $0.10, compared to $0.09 for the second quarter of 2008. Non-GAAP net income per diluted share for the second quarter of 2009 and 2008 was $0.16.

“I’m pleased with our results this past quarter. We established a clear, simple vision to be the center of people’s lives online, and we’re backing that vision with important initiatives to create ‘wow’ experiences for our users,” said Yahoo! chief executive officer Carol Bartz. “We’re confident that this vision will put us on the right path to growth and profitability long term. Our new homepage is a perfect example of our efforts to create innovative products aimed at increasing user engagement while offering the most compelling advertising proposition in the industry.”

“Even in this challenging economic environment, Yahoo! had a solid quarter, reflecting the strength of our offerings for our users and advertisers,” said Yahoo! chief financial officer Tim Morse. “Moving forward, our goal is to invest in the long-term health of the business so that we are positioned to capture the growth opportunities created by the economic recovery and the ongoing shift to online advertising.”

Revenues

* Total revenues were reduced by the effects of currency rate fluctuations, the sale of Kelkoo in late 2008 and lower fees revenues from voice-over IP services and subscription music offerings. Excluding the effects of these items, revenues would have declined 6 percent.

* Marketing services revenues declined 13 percent and fees revenues declined 8 percent, compared to the second quarter of 2008.

* Marketing services revenues from Owned and Operated sites were $858 million for the second quarter of 2009, a 16 percent decrease compared to $1,016 million for the same period of 2008. The decrease was driven by a 15 percent decline in search advertising revenue and a 14 percent decline in display advertising revenue.

* Marketing services revenues from Affiliate sites were $520 million for the second quarter of 2009, a 9 percent decrease compared to $571 million for the same period of 2008. The decrease was driven primarily by a shift to lower yielding inventory.

Cost Initiatives

During the second quarter of 2009, the Company recorded a $65 million net restructuring charge for real estate facilities exited, changes in sublease income estimates for previously exited facilities, write-off of property and equipment for exited facilities, and personnel severance and related costs offset by a reversal of stock-based compensation expense for forfeited awards. The Company is also continuing to implement non-headcount cost reductions.

Cash Flow and Cash Balance

* Cash flow from operating activities for the second quarter of 2009 was $342 million, a 20 percent decrease compared to $426 million for the same period of 2008.

* Free cash flow for the second quarter of 2009 was $266 million, a 15 percent increase compared to $231 million for the same period of 2008.

* Cash, cash equivalents and investments in marketable debt securities were $4,197 million at June 30, 2009 compared to $3,522 million at December 31, 2008, an increase of $675 million.

Business Outlook

GAAP revenue for the third quarter of 2009 is expected to be in the range of $1,450 million to $1,550 million. Non-GAAP operating income before depreciation, amortization, and stock-based compensation expense for the third quarter of 2009 is expected to be in the range of $330 million to $370 million. Income from operations for the third quarter of 2009 is expected to be in the range of $55 million to $65 million.

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— Kara Swisher and Walt Mossberg, in their farewell D post