Yahoo Q3 Profit Slips 5 Percent

CEO Jerry Yang vows to attack the online ad market to better compete with Google and Microsoft.

Still feeling the effects of a major reorganization, Yahoo officials Oct. 16 said third-quarter net income fell 5 percent, to $151.3 million, from $158.5 million in the same period a year earlier.

Yahoo, which replaced Terry Semel as CEO with co-founder Jerry Yang and reorganized into three core business segments this year, said third-quarter revenue rose 12 percent to $1.77 billion, from $1.58 billion.

Net sales excluding payments Yahoo makes to other sites to acquire traffic were $1.28 billion from $1.12 billion, slightly surpassing the $1.24 billion expected from analysts polled by Thomson Financial.

Yahoo attributed the profit slip to weaker spending on advertising, but the Sunnyvale, Calif., company has weathered a lot of changes in the last year, with executives coming and going amid uncertainty about the way to run the business.

Yang said on a conference call that Yahoo plans to capture more of what he claimed is a $45 billion online ad opportunity that will rocket to $75 billion by 2010. Yahoos rivals include Google and Microsoft on this front.


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"The goal is to turn Yahoo into a company that powers and delights all of its communities by creating indispensable experiences," Yang said, noting that the company must better integrate its audience, advertiser and publisher relationships and technology.

Yahoo isnt wasting time getting started. After the bell Yahoo announced an exclusive, multiyear search and advertising distribution deal with health information portal WebMD, as well as display advertising agreements with, and Ziff-Davis Media.

Yang also said Yahoo will extend beyond successful computing starting points, such as the home page, Web mail and search on PCs, to include more mobile applications for consumers. Moreover, Yahoo is looking at many different ways to open up to external developers.

Yahoo will not continue to fund or market certain services, including subscription music and podcasts, and will shut down other one-off services, Yang said. The company has also integrated Yahoo Photos into Flickr and plans to bundle Yahoo 360 into a comprehensive social network (likely into the Yahoo Mash network).

Other changes have been apparent at Yahoo.

Yahoo Oct. 1 introduced a significant overhaul to its consumer search platform, adding several social networking features to the mix.

On Aug. 27, Yahoo added the ability for users to send text or instant messages from a computer to a cell phone via Yahoos Web mail software.


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