Yahoo meets estimates with stagnant revenue

A breakout performance it was not, but Yahoo's fourth quarter was in line with analyst estimates as it improved profits amid declining revenue.

Tom Krazit Former Staff writer, CNET News
Tom Krazit writes about the ever-expanding world of Google, as the most prominent company on the Internet defends its search juggernaut while expanding into nearly anything it thinks possible. He has previously written about Apple, the traditional PC industry, and chip companies. E-mail Tom.
Tom Krazit
2 min read
It's a complicated picture, but the flat trajectory of Yahoo's revenue over the last two years tells a clear story.
It's a complicated picture, but the flat trajectory of Yahoo's revenue over the last two years tells a clear story. Yahoo

Yahoo's overall revenue is still declining, but its fourth-quarter numbers were in line with expectations as the company continues to tread water.

For the period ending December 31, Yahoo reported gross revenue of $1.5 billion, which when traffic-acquisition costs are factored out results in net revenue of $1.2 billion, just ahead of analyst estimates. It's a 4 percent decline from last year's fourth quarter, and can be mostly blamed on the loss of search advertising revenue as Yahoo transitioned its search technology to Microsoft under their 2009 agreement.

Net earnings, however, rose 104 percent to $312 million, up from $153 million in last year's fourth quarter. On a per-diluted share basis, that works out to earnings of 24 cents per share, 2 cents better than the Wall Street community had expected.

The bottom line was undoubtedly aided by 600 layoffs in late 2010, and earlier in the day Yahoo announced that an additional 100 to 150 employees would lose their jobs.

A key metric for Yahoo--display advertising--showed decent growth, with revenue minus traffic-acquisition costs of $567 million, up 16 percent from last year's fourth quarter. Yahoo is more dependent on that revenue than ever, as search revenue minus costs decreased 18 percent from $473 million during last year's fourth quarter to $388 million during this year's closing period.

Looking ahead to the next quarter, Yahoo forecast revenue lighter than what analysts had been expecting, predicting it would take in between $1.02 billion and $1.08 billion, below the average analyst forecast of $1.13 billion.