Yahoo! Inc. (YHOO) Tuesday said its first-quarter profit increased 28 percent from a year ago, driven mainly by higher search revenues. Revenues grew for the first time in three years, with earnings and revenue figures coming in ahead of Wall Street expectations.
Most of Yahoo! offers are offered for free and therefore requires more of ad revenues to boost its performance. Nonetheless, the internet giant has not been able to keep pace with competition in search business from Google (GOOG) and also from the increasing popularity of Facebook. For the first quarter of 2012, Yahoo!'s search revenues excluding traffic acquisition costs advanced 8 percent to $384 million, while display revenues on that basis dropped 4 percent to $454 million.
Two weeks ago, Chief Executive Scott Thompson had announced layoff of about 2,000 employees, or 14 percent of workforce, while aiming to be more profitable with focus primarily on a "select group of core businesses".
Thompson said, "In the first quarter, Yahoo!'s results came in at the high end of our guidance range and beat consensus on revenue and profits. We also made changes to resize the organization and establish a new leadership structure to quickly deliver the best user and advertiser experiences at scale."
Yahoo! said its revenues for the quarter inched up to $1.22 billion from $1.21 billion last year. Revenues excluding traffic acquisition costs grew 1 percent to $1.08 billion, and topped analysts' estimate of $1.06 billion.
Traffic acquisition costs are payments made by internet search companies to affiliates or online firms that direct consumer and business traffic to their websites. Traffic acquisition costs for the quarter dropped to $144 million from $150 million last year.
Sunnyvale, California-based Yahoo!'s first-quarter profit improved to $286.3 million or $0.23 per share from $223.0 million or $0.17 per share last year. On average, 28 analysts polled by Thomson Reuters expected earnings of $0.17 per share for the quarter. Analysts' estimates typically exclude special items.
Operating margin was 16 percent for the quarter, unchanged from last year, but on an adjusted basis, the margin improved to 17 percent from 16 percent.
Looking forward to the second quarter, the company expects revenues excluding traffic acquisition costs in the range of $1.03 billion to $1.14 billion. Total revenues for the second quarter are expected to be in a range of $1.17 billion to $1.29 billion. Analysts currently estimate revenues of $1.08 billion for the quarter.
YHOO closed Tuesday's trading at $15.01, up $0.23 or 1.52% on the Nasdaq. The stock further gained $0.40 or 2.66% in after-hours trade. Trading volume for the day was 20.5 million shares, above the three-month average volume of 17.3 million.
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