Yahoo: Ads, Premium Services Helped Double Earnings

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.

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