RealTime IT News

Yahoo Profits Drop 37%

Yahoo said its net profit fell 37.25 percent to $159 million ($0.11 per diluted share) in the third quarter and total operating expenses rose 32.61 percent.

"We are not satisfied with our third quarter financial performance," CEO Terry Semel said in a statement.

Yahoo's revenues were $1.58 billion for the third quarter, a 19 percent increase compared to $1.33 billion for the same period in 2005.

But in the nine months ending Sept. 30, expenses were up 42.5 percent over the same period in 2005. After subtracting commission Yahoo paid its advertising partners, third-quarter revenue totaled $1.12 billion, slightly below analyst expectations that had been lowered by Yahoo management a month ago.

Yahoo  shares fell to $24.15 on the NASDAQ, down nearly 3 percent on the day and nearly 45 percent from the 52 week high.

Semel hasn't been happy with Yahoo's financial performance for awhile.

At least not since he told analysts at Goldman Sachs Communicopia conference in New York in September that he'd seen a slowdown in advertising growth from the automotive and financial services sectors.

The company remains wounded by delays to its search marketing product code-named Panama. Internet advertising revenues rose 30 percent in 2005 and the growth was largely due to search marketing.

Today, Yahoo announced an investment and an acquisition aimed at bolstering its advertising business.

Yahoo bought AdInterax and took a 20 percent stake in Right Media, creator of the Right Media Exchange, according to statements.

Yahoo said it bought AdInterax for its ad technology. The Right Media Exchange is an online exchange for publishers and advertisers. Yahoo said it will participate in the exchange.