April 21, 2010

Yahoo’s Sees Good First Quarter Growth

Yahoo Inc. performed its best quarterly performance since hiring Carol Bartz and its partnership with Microsoft Corp.

The company reported its first revenue growth in 18 months on Tuesday, although the meager gain of 1 percent fell short of management and analyst hopes.

The earnings for the January-March period doubled as Yahoo began to see benefits from its partnership with Microsoft for its Internet search results and accompanying ads.

The savings and scheduled payments from the deal began to flow to Yahoo after U.S. and European regulators approved the alliance in February, although the transition will not be done until next year.

Microsoft paid $78 million in the first quarter in net payments.  Yahoo expects to receive $75 million to $85 million per quarter from Microsoft for the rest of the year.

Yahoo also received a first-quarter boost from the January sale of an e-mail service.

"We delivered what I would call a solid quarter," Bartz told analysts in a conference call.

Bartz became Yahoo's CEO early last year after the company lost two previous leaders Jerry Yang and Terry Semel when the company fell into a financial funk.

Bartz focused on cutting costs while the company's fortunes sagged as the recession worsened.  The partnership with Microsoft helped lower Yahoo's first-quarter operating costs by 10 percent.

Yahoo earned $310.2 million in its first quarter, compared to $117.6 million a year ago.

Yahoo said it would have earned more if it was not for one-time gains. 

Revenue in the period totaled $1.6 billion, which was about 1 percent more than the previous year.  Management, along with analysts, estimated a 3 precut increase in revenue.

Management predicts a 4 percent rise in revenue during the second-quarter.

Yahoo's display advertising saw a 20 percent increase, which is a category that includes online billboards and other more dynamic commercial messages.

"Purse strings are starting to loosen up," Bartz told the Associated Press.

Yahoo's total advertising revenue increased 3 percent.  Google Inc., the leader in the search market, saw a 21 percent increase in its first quarter. 

Microsoft hopes that its partnership with Yahoo will help gain market share over the Internet search giant.


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