Amended: corrects income tax provision figures in the 12th para.
Yahoo! Inc. (YHOO) on Tuesday reported a better-than-expected increase in first-quarter profit, helped by lower traffic acquisition costs at its Search business, reduced income tax provision as well as income from other streams.
Display ad business declined eleven percent, as revenues missed expectations, sending Yahoo! shares down by 4 percent in after-hours trade on the Nasdaq.
Yahoo! CEO Marissa Mayer said the quarter was marked by some sort of business stability and that the company is set for long-term growth.
Mayer, a former Google executive who took over as the CEO of Yahoo! in July, has laid focus on mobile technology and has been wrapping up startups. She also has her hands set on ramping up the Yahoo! homepage and enhancing user experience.
Mayer's plans for Yahoo! includes reducing the number of mobile apps and fostering a closer relationship with Facebook Inc. (FB). The company surprised investors by announcing an advertising alliance with Google in February.
The Sunnyvale, California-based company's total revenues for the quarter slid 7 percent to $1.14 billion from $1.22 billion last year.
Excluding traffic acquisition costs, or ex-TAC, - the fees shared with partners -revenues for the quarter were $1.074, compared to $1.077 billion in the prior year. On average, 28 analysts polled by Thomson Reuters expected revenues of $1.10 billion for the quarter.
At core Search business, revenues ex-TAC for the quarter increased 6 percent from last year to $409 million. Paid clicks, excluding Korea, jumped about 16 percent, while price-per-click was down 7 percent.
CEO Mayer has been striving to place Yahoo! on a high growth trajectory even as it badly trails Google (GOOG) in the search business. Mayer earlier opined that a search deal with Microsoft (MSFT), signed in 2010, hasn't been satisfying.
Display business revenues ex-TAC for the quarter slipped 11 percent from last year to $402 million. The number of ads sold on core Yahoo! Properties, excluding Korea, fell 7 percent, while price-per-ad edged down 2 percent. Other revenues ex-TAC increased to $263.6 million from $239.96 million.
Results were also helped with income tax provision dropping to $29.7 million from $56 million in the prior year.
Yahoo! posted quarterly net earnings of $390 million or $0.35 per share, compared to $286 million or $0.23 per share last year.
Excluding items, adjusted earnings for the quarter were $420 million or $0.38 per share, compared to $333.6 million or $0.27 per share a year ago. Analysts had a consensus earnings estimate of $0.24 per share for the quarter. Analysts' estimates typically exclude special items.
Last month, media reports said Yahoo was in talks to buy a controlling stake in France Telecom SA's (FTE) online video site Dailymotion. Dailymotion is similar to Google Inc.'s (GOOG) YouTube, but smaller in scale.
YHOO closed Tuesday at $23.80, down 0.75%, on a volume of over 25 million shares. In after hours, the stock dropped $0.94 or 3.95%. In the past year, the stock has trended in a range of $14.59 - $24.99.
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