Yahoo! Inc. (YHOO) reported 3rd quarter earnings after the bell Tuesday with mixed results. On the top line, revenues were much better than expected at $1.6 billion — the most recent Zacks Consensus Estimate was for $1.13 billion in quarterly revenues. Net EPS was reported at 29 cents per share.
However, accounting for two considerable one-time gains — 14 cents per share in Yahoo’s sale of HotJobs to Monster Worldwide (MWW) and 4 cents per share from selling off a small percentage of Alibaba — YHOO earnings came in at 12 cents per share, 3 cents short of the Zacks Consensus Estimate of 15 cents.
Among the successes for Yahoo in the quarter, owned and operated display advertising grew 17% from the 3rd quarter 2009. However, that is down from 19% growth in the 2nd quarter 2010.
Analysts had scarcely tried to dip a toe into the pool of estimate revisions for the quarter. The quarter was rife with drama throughout — from public and private grousing about Yahoo’s front office and operations, to the rather tense stand-off in which Yahoo declined to sell its 39% stake in Chinese B2B portal Alibaba.com, to last week’s soap opera involving a supposed AOL buyout of Yahoo — it’s no wonder analysts have remained in “wait and see” mode.
The Zacks Consensus Estimate for the quarter was 15 cents per share, revised down a penny over the past 90 days. For YHOO’s 4th quarter, the Zacks Consensus Estimate expects earnings of 19 cents per share and 70 cents for full-year 2010.
Yahoo also cited specific deals which the company feel will pave the way forward, including its recent purchase of display ad operator Dapper, an extended partnership with Sprint (S) to supply Yahoo services to Sprint’s mobile phone users, an advertising deal with Gannett publications and its continued progress of migrating its search engine with Microsoft (MSFT).
But Yahoo gave lower guidance for 4th quarter revenue than many analysts had been predicting, which comes as a disappointment. As always, we will keep a close eye on earnings estimate revisions as they react to this news in the coming days.
Investors have thus far not reacted to the earnings report — shares are down a penny in the after-market following a 2.73% dip in Tuesday trading before the bell. But with overall Yahoo news currently meaning so much more than a moderately disappointing 3Q report, it looks as investors are also in “wait and see” mode.
MICROSOFT CORP (MSFT): Free Stock Analysis Report
MONSTER WWD INC (MWW): Free Stock Analysis Report
SPRINT NEXTEL (S): Free Stock Analysis Report
YAHOO! INC (YHOO): Free Stock Analysis Report
Zacks Investment Research
