Yahoo: Ads, Premium Services Helped Double Earnings

By Matthew Hicks  |  Posted 2004-07-07 Print this article Print

The company reports doubled earnings and sales for the second quarter, but its shares fall as results simply meet expectations. CEO Semel says to expect further product rollouts in the coming months.

Yahoo doubled its earnings in the second quarter, continuing a string of record quarters but failing to wow Wall Street on Wednesday. Yahoo Inc.s net income for the quarter ended June 30 rose to $113 million, or 8 cents per share, compared with $51 million, or 4 cents a share, a year earlier, the company announced. The Sunnyvale, Calif., companys revenues, excluding its payments to traffic partners, jumped to $609 million for the quarter. The revenues were almost twice those for the same period a year earlier of $321 million.
Despite strong earnings, shares in Yahoo fell 62 cents Wednesday to close at $32.60 on Nasdaq and were falling in after-hours trading. Its results merely met the consensus among Wall Street analysts after exceeding their expectations during the first quarter of this year.
"In Q2, we delivered the best quarter in Yahoos history," said Terry Semel, the companys chairman and CEO. "Yahoo is clearly on the move." Semel attributed the strong earnings to both the companys advertising revenues and its premium services. Advertising alone, largely from the Overture Services division it acquired last year, rose to $691 million for the quarter from $219 million a year ago. Saying that Yahoo is in the middle of a "global product renaissance," Semel told analysts during a conference call to expect a series of new product rollouts in the next few months. Among them will be further enhancements to Yahoo Mail, which last month underwent a remodel that included a storage increase to as much as 2 gigabytes for paying users. Yahoo also will complete the rollout of its new Web search technology within the next few weeks once its Taiwan site switches to its algorithmic results, Semel said. While expanding in many areas, Yahoo also has exited the enterprise market. In late June, the company stopped offering an enterprise instant messaging service, called Yahoo Business Messenger. Yahoo finished the quarter with 300 million unique users, a 27 percent increase from a year ago, Semel said. Yahoo and its associated sites are the most visited on the Internet, according to comScore Media Metrix. Sites from Time Warner Inc., including America Online Inc., and Microsoft Corp. follow closely behind. Check out eWEEK.coms Enterprise Applications Center at for the latest news, reviews and analysis about productivity and business solutions.

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Matthew Hicks As an online reporter for, Matt Hicks covers the fast-changing developments in Internet technologies. His coverage includes the growing field of Web conferencing software and services. With eight years as a business and technology journalist, Matt has gained insight into the market strategies of IT vendors as well as the needs of enterprise IT managers. He joined Ziff Davis in 1999 as a staff writer for the former Strategies section of eWEEK, where he wrote in-depth features about corporate strategies for e-business and enterprise software. In 2002, he moved to the News department at the magazine as a senior writer specializing in coverage of database software and enterprise networking. Later that year Matt started a yearlong fellowship in Washington, DC, after being awarded an American Political Science Association Congressional Fellowship for Journalist. As a fellow, he spent nine months working on policy issues, including technology policy, in for a Member of the U.S. House of Representatives. He rejoined Ziff Davis in August 2003 as a reporter dedicated to online coverage for Along with Web conferencing, he follows search engines, Web browsers, speech technology and the Internet domain-naming system.

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