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Yahoo raises outlook, delivers bit of good news

Yahoo hits Wall Street's earnings target for the third quarter and boasts a higher outlook.

Despite some upheaval following the sudden departure of former CEO Carol Bartz and the resurrection of Microsoft buyout rumors, Yahoo managed to deliver some good news for the third quarter of 2011.

Yahoo reported third-quarter net earnings of $293 million, or 23 cents a share (statement). Non-GAAP earnings were 21 cents a share on revenue excluding traffic acquisition costs of $1.072 billion, a 5 percent decrease from the third quarter of 2010.

Wall Street was looking for earnings of 17 cents a share on revenue of $1.07 billion.

CFO and Interim CEO Tim Morse summed up the quarter in a statement:

We're pleased that revenue, operating income and EPS were all above consensus this quarter. My focus, and that of the whole company, is to move the business forward with new technology, partnerships, products, and premium personalized content -- all with an eye toward growing monetization.

For the outlook, Yahoo is predicting revenue of $1.125 billion to $1.235 billion at the end of the fourth quarter.

For the fourth quarter of 2011, Wall Street is looking for earnings of 22 cents a share on revenue $1.21 billion.

Key points:

• Yahoo has 10 No. 1 properties worldwide and ranks among the top three in 21 categories worldwide.

• Yahoo also has 10 out of the top 10 original video programs in the U.S. on the Web.

• Yahoo and ABC News partnered to bring ABC News content to Yahoo, including "Good Morning America" and a live stream of ABC News anchor George Stephanopoulos interviewing President Barack Obama at the White House. • Yahoo introduced more original Web shows in tandem with the beta launch of revamped video destination, Yahoo Screen.

By the numbers:

• Income from operations decreased 6 percent to $177 million in the third quarter of 2011, compared to $189 million in the third quarter of 2010.

• Free cash flow was $247 million for the third quarter of 2011, a 1 percent decrease compared to $250 million for the same period in 2010.

• GAAP search revenue was $467 million, a 44 percent decrease compared to $839 million for the third quarter of 2010.

This story was originally published at ZDNet's Between the Lines.