Yahoo Q1 Earnings Rise, Yang Hails Display Ad Future
Softness persists in travel, financial, and retail advertising however.
Yahoo’s net income grew to $542 million on revenue of $1.7 billion during the first quarter, coming in at the upper end of its guidance and beating some analyst estimates. The company made the case to investors that it could keep pace with Google in search monetization, but said its greatest ambition is to lead a revolution in display advertising.
Net income included a $401 million gain from the public offering of Alibaba.com, in which it has a 40 percent ownership stake, during the quarter.
The strong showing should help the company contend with a looming proxy takeover bid by Microsoft. CEO Jerry Yang said the upbeat results were all the more astonishing in light of the Microsoft situation and the nation’s economic hardships.
“We continued our efforts to transform the display industry,” said Yang in a statement. “The quarter’s results underscore the fact that our strategies and investments are continuing to pay off.”
It was a busy quarter for Yahoo, and not only because of the Microsoft bid. Yahoo also implemented large scale layoffs in February, previewed its AMP platform with select newspaper publishers, and acquired video platform Maven Networks. Additionally, shortly after the quarter ended Yahoo said it would test Google ads on up to 3 percent of its search queries.
The test’s goal is to increase near-term monetization, president Sue Decker said, though she added, “it’s premature to speculate on what options we might ultimately pursue or whether some relationship with Google might result.”
CFO Blake Jorgensen said Yahoo continued to see softness in financial, travel and retail advertising during the quarter. Telecom and technology remain very strong on display side, he said. Execs from both Yahoo and Google have expressed optimism that the troubled economy’s impact would be cushioned by online advertising’s measurability.
Decker, meanwhile, said Yahoo had seen demand shift away from guaranteed (premium) inventory to non-guaranteed (remnant) inventory, part of the reason the company has accelerated its AMP platform development. She said the company had redeployed key talent from Yahoo and its Right Media and Blue Lithium acquisitions to the project during the latter part of 2007.
“AMP is the first launch of a number of different launches that will be built on the same platform. Over time search will be integrated fully into that,” she said.
