Yahoo’s first-quarter profit nearly triples to shoot past analyst estimates

more images

more images

more images

Yahoo 1Q profit nearly triples, tops analyst views

SAN FRANCISCO — Yahoo Inc.’s first-quarter earnings nearly tripled as the Internet company’s revenue edged up for the first time in 18 months.

The results released Tuesday represented Yahoo’s best quarterly performance since it hired CEO Carol Bartz to engineer a turnaround early last year. Investors apparently were hoping for even more progress, and Yahoo shares fell more than 2 percent.

The performance reflected an upturn in online advertising, the main source of Yahoo’s income. Advertisers have been spending more freely in recent months amid signs that the U.S. economy has emerged from its worst recession in more than 70 years.

Display advertising, a category that includes online billboards and other visual marketing campaigns, surged 20 percent from last year, Yahoo said.

“High-quality advertisers are coming back,” Tim Morse, Yahoo’s chief financial officer, said in a Tuesday interview. “We are still in the very early innings of this turnaround.”

Reflecting that confidence, Yahoo predicted its revenue could rise by as much as 7 percent to nearly $1.7 billion in the current quarter, which ends in June.

The company earned $310.2 million, or 22 cents per share, in the January-March period. That compared with income of $117.6 million, or 8 cents per share, a year ago.

The results were boosted by the recent sale of an e-mail service and the initial payments from Microsoft Corp. to cover some of the costs of a search advertising partnership between the two companies.

Excluding those one-time gains, Yahoo said it would have earned 15 cents per share. That figure easily topped the average estimate of 9 cents per share among analysts polled by Thomson Reuters.

Yahoo eked out a 1 percent increase in revenue during its just-completed quarter to $1.6 billion. Although modest, the gain represented the first time Yahoo’s quarterly revenue has increased since the third quarter of 2008.

After subtracting commissions paid to its advertising partners, Yahoo’s revenue totaled $1.13 billion — about $40 million below analyst estimates.

Yahoo shares shed 43 cents in extended trading Tuesday after finishing the regular session at $18.38, down a penny.

Besides attracting renewed interest from advertisers, Yahoo also is getting a lift from a cost-cutting campaign orchestrated by Bartz and Morse. The company’s total operating expenses dropped 10 percent in the first quarter to $703 million.