11 Jul 2002 07:45
Yahoo! reported its first profit in six quarters Wednesday and raised its revenue and earnings estimates for the rest of the year amid predictions of strong advertising sales growth.
The Web portal reported net income of $21.4m (£15m), or 3 cents a share, on sales of $225.8m. That's compared with a net loss of $48.5m and revenue of $182.2m for the same period in 2001.
The company recorded $36.1m in earnings before interest, taxes, depreciation and amortisation (EBITDA) -- one of the most closely watched measures of the financial performance of media companies. That's in contrast to an EBITDA loss of $38m last year.
Yahoo! was up 46 cents at $12.65 a share in after-hours trading, according to electronic securities firm Island.
Yahoo!'s advertising business, its bread and butter, continued to show declines. The company recorded $135.7m in marketing services revenue, which largely consists of online advertising dollars. That's a 4 percent decrease from the same period in 2001, mostly because of a drop in advertising contract renewals, according to the company.
However, chief executive Terry Semel emphasised that Yahoo! expects to show growth in this division in the coming quarters.
"We feel confident we will achieve double-digit year-over-year growth in marketing services during the second half of this year," Semel said in a conference call, adding that advertising in certain areas is growing despite overall declines.
For the current quarter, transactions posted a 179 percent revenue increase from 2001, driven by online purchases on Yahoo!'s shopping sites and the recouping of performance-based fees from partners.
The company's fees and listings business, its third business line that includes its expanding pool of paid premium services, jumped 109 percent from last year to $74.1m. The increase was attributed to Yahoo!'s acquisition of online job-listing site HotJobs last quarter, the rise in premium services subscribers and its growing online personals business.
Fees and listings accounted for 40 percent of total revenue, according to Yahoo!. The company said it ended the second quarter with more than 1 million paying customers, up from 600,000 in the first quarter.
Excluding the contribution of HotJobs, listings revenues rose 19 percent from the first quarter, according to Yahoo! chief financial officer Susan Decker.
Looking forward, Yahoo! raised its 2002 annual revenue estimate to between $900m and $940m; it now expects third-quarter revenue to come in between $225m and $250m.
Yahoo! also raised its 2002 EBITDA estimates to between $140m and $165m; EBITDA estimates for the next quarter are between $38m and $48m.
Next quarter, capital expenses are expected to come in between $10m and $15m. They are likely to reach between $40m and $50m for 2002. Depreciation will range between $22m and $24m next quarter and $85m and $90m for 2002.
Yahoo! also said it extended a deal to carry Google's search listings as a backup for its own search directory until September.
Decker said in an interview that the quarter offered solid proof that Yahoo! had unwound itself from its many dot-com advertising deals. She added that traction in the premium services businesses was significant, given that it barely existed a year ago.
"This is a symbolic quarter," she said.
Still, analysts for now are unwilling to call it a recovery. Despite bullish revenue projections for the coming year, the Internet remains unproven territory for advertisers, they said.
"It's too soon," Jeetil Patel, an analyst at Deutsche Banc Alex Brown, said in reference to an Internet recovery. "There are still lots of questions around formats and pricing and whether (the Web) is a direct marketing or branding vehicle."
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