Tweet
January 26, 2011, 12:23 AM EST
By Brian Womack
Jan. 26 (Bloomberg) -- Yahoo! Inc. fell as much as 4 percent yesterday in extended trading after the company’s first- quarter sales outlook missed analysts’ estimates, dragged down by early results from its search agreement with Microsoft Corp.
The company forecast revenue, excluding sales passed on to partners, of $1.02 billion to $1.08 billion, compared with $1.14 billion, the average of estimates in a Bloomberg survey. Operating profit will be $130 million to $160 million this quarter, short of the $201.8 million projected by analysts.
Chief Executive Officer Carol Bartz, who has slashed costs to help drive a two-year-old turnaround effort, said on a call with analysts that the alliance with Microsoft is not yet producing as much ad-based revenue as expected. Yahoo and Microsoft merged their search-ad operations in the U.S. and Canada in the fourth quarter, igniting hope that they could mount a bigger challenge to market leader Google Inc.
“There is a transition issue that needs to be worked through,” said Lou Kerner, an analyst with Wedbush Securities Inc. in New York. He rates the stock “underperform” and doesn’t own it. “They seem confident they’ll be able to work it through, but they certainly were caught off-guard by the difficulty of the transition.”
Yahoo didn’t get as much revenue per search as it had expected, company executives said yesterday. That figure will be “flattish” this quarter, and may show signs of improvement by midyear, Chief Financial Officer Tim Morse said during a call with analysts.
“There’s no bigger focus for the alliance,” Morse said.
Yahoo, based in Sunnyvale, California, declined 7 cents to $16.02 yesterday on the Nasdaq Stock Market. The stock dropped as low as $15.38 in late trading. The shares were little changed last year.
Bartz Cuts Back
Bartz is aiming to make the company more efficient as it grapples with competition from Facebook Inc. and Google. Yahoo said yesterday it was eliminating about 1 percent of its workforce. Last month Yahoo said it was cutting about 600 jobs, or about 4 percent of its employees. The reductions followed a round of cuts in 2009 in Bartz’s first year of leadership.
Still, Bartz said on the call that she expects to expand the company’s headcount by the end of the year. The company needs to invest in its main properties, including the home page, finance and sports.
“We’re not trying to cut our way to revenue growth,” she said.
Fourth-quarter net income attributable to the company rose to $312 million, or 24 cents a share, from $153 million, or 11 cents, Yahoo said. The earnings figure reflects 2 cents in restructuring charges, and compares with the average analyst estimate of 22 cents a share. Sales were $1.21 billion.
‘Struggling Property’
The company also is pulling back on the amount of services it offers users. Yahoo plans to shut down some features, including Yahoo! Buzz, a news-ranking tool, it said last month.
Bartz also has reduced spending through the 10-year agreement that lets Microsoft handle search-related technology and the platform that sells search-based ads, called AdCenter.
Microsoft and Yahoo had 28 percent of Internet searches in the U.S. during December, while Google grabbed 66.6 percent, according to ComScore Inc. in Reston, Virginia.
“This is a company that is still very much in the middle of its turnaround,” said Colin Gillis, an analyst at BGC Partners in New York, who rates the stock a “hold” and doesn’t own it. “Yahoo is a struggling property -- for revenue growth.”
--Editors: Jillian Ward, Lisa Wolfson
To contact the reporter on this story: Brian Womack in San Francisco at bwomack1@bloomberg.net
To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net
Powered By WizardRSS
Jan. 26 (Bloomberg) -- Yahoo! Inc. fell as much as 4 percent yesterday in extended trading after the company’s first- quarter sales outlook missed analysts’ estimates, dragged down by early results from its search agreement with Microsoft Corp.
The company forecast revenue, excluding sales passed on to partners, of $1.02 billion to $1.08 billion, compared with $1.14 billion, the average of estimates in a Bloomberg survey. Operating profit will be $130 million to $160 million this quarter, short of the $201.8 million projected by analysts.
Chief Executive Officer Carol Bartz, who has slashed costs to help drive a two-year-old turnaround effort, said on a call with analysts that the alliance with Microsoft is not yet producing as much ad-based revenue as expected. Yahoo and Microsoft merged their search-ad operations in the U.S. and Canada in the fourth quarter, igniting hope that they could mount a bigger challenge to market leader Google Inc.
“There is a transition issue that needs to be worked through,” said Lou Kerner, an analyst with Wedbush Securities Inc. in New York. He rates the stock “underperform” and doesn’t own it. “They seem confident they’ll be able to work it through, but they certainly were caught off-guard by the difficulty of the transition.”
Yahoo didn’t get as much revenue per search as it had expected, company executives said yesterday. That figure will be “flattish” this quarter, and may show signs of improvement by midyear, Chief Financial Officer Tim Morse said during a call with analysts.
“There’s no bigger focus for the alliance,” Morse said.
Yahoo, based in Sunnyvale, California, declined 7 cents to $16.02 yesterday on the Nasdaq Stock Market. The stock dropped as low as $15.38 in late trading. The shares were little changed last year.
Bartz Cuts Back
Bartz is aiming to make the company more efficient as it grapples with competition from Facebook Inc. and Google. Yahoo said yesterday it was eliminating about 1 percent of its workforce. Last month Yahoo said it was cutting about 600 jobs, or about 4 percent of its employees. The reductions followed a round of cuts in 2009 in Bartz’s first year of leadership.
Still, Bartz said on the call that she expects to expand the company’s headcount by the end of the year. The company needs to invest in its main properties, including the home page, finance and sports.
“We’re not trying to cut our way to revenue growth,” she said.
Fourth-quarter net income attributable to the company rose to $312 million, or 24 cents a share, from $153 million, or 11 cents, Yahoo said. The earnings figure reflects 2 cents in restructuring charges, and compares with the average analyst estimate of 22 cents a share. Sales were $1.21 billion.
‘Struggling Property’
The company also is pulling back on the amount of services it offers users. Yahoo plans to shut down some features, including Yahoo! Buzz, a news-ranking tool, it said last month.
Bartz also has reduced spending through the 10-year agreement that lets Microsoft handle search-related technology and the platform that sells search-based ads, called AdCenter.
Microsoft and Yahoo had 28 percent of Internet searches in the U.S. during December, while Google grabbed 66.6 percent, according to ComScore Inc. in Reston, Virginia.
“This is a company that is still very much in the middle of its turnaround,” said Colin Gillis, an analyst at BGC Partners in New York, who rates the stock a “hold” and doesn’t own it. “Yahoo is a struggling property -- for revenue growth.”
--Editors: Jillian Ward, Lisa Wolfson
To contact the reporter on this story: Brian Womack in San Francisco at bwomack1@bloomberg.net
To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net
Powered By WizardRSS