Earnings Preview : Yahoo! Inc. (NASDAQ: YHOO) Second Quarter 2010
Friday, July 16, 2021 12:36 PM

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Yahoo! Inc. (NASDAQ: YHOO) is scheduled to release fiscal second-quarter earnings after the closing bell on Tuesday, July 20, 2010. Analysts, on average, expect the company to report earnings of 14 cents per share on revenue of $1.16 billion. In the year-ago period, the company posted earnings of 10 cents per share on revenue of $1.14 billion.

Yahoo! Inc. provides online properties and services to users; and marketing services to advertisers worldwide. Yahoo! Inc., together with its consolidated subsidiaries, attracts hundreds of millions of users every month through its innovative technology and engaging content and services, making it one of the most trafficked Internet destinations

In the preceding first quarter, the Sunnyvale, California-based company reported that net income jumped to $310 million or 22 cents a share, from $118 million or 8 cents a share in the same period last year. Revenue totaled $1.597 billion for the first quarter of 2010, a 1 percent increase from the first quarter of 2009. Analysts, on average, expected the company to report earnings of 9 cents a share on revenue of $1.17 billion.

In April, the company forecast second quarter revenue in the range of $1.6 billion to $1.68 billion. The company expects to report income from operations for the second quarter in the range of $155 million to $195 million. Total expenses (cost of revenues plus total operating expenses) for the second quarter of 2010 is expected to be in the range of $1.445 billion to $1.485 billion.

During an analyst meeting in May, Yahoo's chief financial officer Tim Morse said that the company's operating profit margin for the period from 2010 to 2013 is expected to grow in a range of 18%-24%. In October last year, the company had projected operating margin for the period in a range of 15%-20%. The Sunnyvale, California-based company expects net revenue growth between 2010 and 2013 in a range of 7%-10%. This compares to a 13% decline in revenue recorded by the company for fiscal year 2009, excluding TAC.

The key revenue driver, according to Morse, would be Yahoo's core display advertising business, which is expected to grow between 13% and 16% annually over the three-year period. Search revenue is projected to increase 3% to 6% during the period. The company expects annual costs to increase 2% to 3% through 2013. Yahoo expects savings of about $300 million this year and $650 million in 2013 from Microsoft deal.

Yahoo under Bartz has cut cost and shut underperforming businesses and has continued to improve its products, such as its home page and e-mail service. The savings generated by its cost- cutting efforts has enabled it to hire people for sales and engineering. The company has also entered into a number of partnerships to improve and enhance its product offerings. In May, the web giant announced a partnership with leading social game developer Zynga to bring social gaming platform to Yahoo. Also, the company announced improved integration with social networking behemoth Facebook. Late in May, Yahoo entered into a worldwide strategic alliance with mobile device manufacturing giant Nokia (NYSE: NOK) to expand global business. Recently, Yahoo Inc. and real estate listings and search site Zillow.com agreed to partner on an Internet real-estate advertising network. In June, the company expanded the reach of its mobile products and services with the launching of Yahoo! Mail and Yahoo! Messenger apps for Android as well as a Yahoo! Search Widget for Android. In addition, the company acquired Indonesian mobile social network Koprol and freelance news website Associated Content during the quarter. According to Bartz, Yahoo is focused on making small acquisitions that open the door to new audiences, give the company new analytic tools and expand its geographic reach.

The company is likely to benefit from an uptick in online ad spending. According to market research firm eMarketer global online ad spend will increase by 12% year-on-year in 2010 to hit $61.8 billion.

Among other developments, the company announced late in June that its board approved a new stock repurchase program and has authorized the company to repurchase up to $3 billion of its outstanding shares of common stock.

In terms of stock performance, shares of the company are down nearly 10% since the beginning of the year.

Disclosure: Author doesn't own any of the stocks discussed here.



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