Yahoo! Revenues Rise, Fail To Meet Expectations

Casting doubt over the future of online advertising growth, Yahoo!'s second-quarter profits posted Tuesday failed to meet Wall Street expectations, despite a more than 40 percent rise in quarterly revenue. Yahoo!'s revenue, excluding marketing fees to site owners carrying its search ads, was $875 million--up nearly 45 percent from last year, but short of Wall Street's average forecast of $881.8 million.

All the same, Chairman and Chief Executive Terry Semel stuck an upbeat note during the earnings call after the market closed. "Yahoo! continued to see solid growth in the second quarter as a result of our strength in both search marketing and brand advertising," Semel said.

For the period ending June 30, Yahoo! posted a net income of $754.7 million, or 51 cents a share, excluding traffic acquisition costs. Excluding $563 million from the sale of an investment, Yahoo! reported 13 cents a share, in line with analyst estimates and 5 cents above last year.

The company previously forecast second-quarter revenue of $855 million to $859 million, when it posted first-quarter results in April.

Subscriptions accounted for $158.7 million, or 18 percent, of second-quarter revenue, minus advertising commission.

Yahoo! forecast revenue--excluding traffic acquisition costs--of $880 million to $930 million for the third quarter, and of $3.6 billion to $3.7 billion for the year.

The company said it hopes to have over 12 million subscribers by the end of the year.

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