Yahoo Beats On Profits, Posts Shrinking Revenues Just Like Everyone Thought

Tim MorseInterim Yahoo CEO Tim Morse

Photo: Yahoo

THE NUMBERS ARE IN.OVERALL THEME: Yahoo beat profit expectations and revenues are where everyone expected them to be: down year-over-year.

In other words, this was a typical Carol Bartz era quarter.


ACTUAL: $1.07 – down 5% y/y.

Consensus: $1.07 billion

Guidance: $1.05 to $1.1 billion


ACTUAL: $.21

Consensus: $.17 EPS

Down 21% y/y.

More highlights:

  • Display revenue ex-TAC was $449 million, which was flat compared to $448 million for the third quarter of 2010.
  • Search revenue ex-TAC was $374 million, a 13 per cent decrease compared to $428 million for the third quarter of 2010.

Q4 Outlook:

  • ex-TAC revenues: $1.25 billion to $1.24 billion.
  • GAAP revenue: $1.275 billion to $1.395 billion.
  • Income from operations: $200 million to $260 million.

Yahoo will host an earnings call at 5pm eastern.

We’ll take notes from that call here.


Anything not in quotes is not a quote.


4:59 – We’re on the call early. The music is very mellow. If you’re looking for something to read while we wait, check out Apple’s disappointing earnings.

5:00 – We’re starting! Tim Morse is on the call. That’s it!

5:03 – Reveneue, operating income and EPS were above consensus says Tim. Not sure that’s true.

5:03 – Tim says the board is actively looking at the full range of options available to return to growth and create value for employees, advertisers, users and shareholders.

5:03 – The rest of the call is going to be about Q3 and Q4 guidance.

5:05 – Yahoo bought 43 million shares during the quarter.

5:06 – Sell-through, sold impressions are up in premium  placements. Non-premium was done.

5:07 – Sales force headcount has stabilised. Sales productivity is ramping up. You see it in sell-through, Tim says.

5:09 – He’s going through product announcements from the quarter. You can read about them here.

5:11 – Thanks to the MSFT deal, Yahoo has closed 30% of the revenue-per-search gap it posted in April.

5:11 – Yahoo still expects to completely switch to MSFT algorithmic search by the end of this year. Only one remains: Korea.

5:12 – Yahoo Japan is worth $6.4 billion. Yahoo is working on a way to unlock the value for shareholders, tax-free. Yahoo’s investment in the Alibaba group is worth $14 billion on a pre-tax basis.

5:14 – Tim thanks Yahoo employees for remaining focused during the chaos.

5:16 – July was weak, but August and September were solid for display sales, says Tim. Expect a normal sequential bump in Q4.

5:26 – Morse says the RPS guaruntee with MSFT has been extended for an extra year – through March 2013. Same terms.

5:38 – Morse confirms that there is a CEO search underway.

5:38 – An analyst wants to know when the board is going to announce any of its decisions. By when? The end of the year?

5:38 – Morse dodges the question.

5:46 – Morse talks about non-premium’s declines. It’s volume and yield. It’s in Mail, News, and Finance. “We need to tweak and optimise.”

That’s it!


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