Yahoo Inc. is hoping a new online advertising system and an increased presence in wireless can help it close the widening gap between it and rival Google Inc.
The Sunnyvale, Calif.-based company beat analysts’ quarterly expectations for the first time in more than a year, reporting fourth-quarter sales of $1.7 billion, up 13 percent from the same period a year ago. Net income declined 61 percent, however, dropping from $683 million to $269 million, due largely to a one-time gain of $310 million that boosted 2005 results.
The results marked the first time Yahoo had beaten analysts’ forecasts since the third quarter of 2005. Google, meanwhile, easily exceeded expectations through the first three quarters of 2006; the company will release fourth-quarter results next week.
Investors were pleased with the results, sending shares of Yahoo up more than 7 percent to $28.97, wagering that the long-awaited advertising upgrade, dubbed Panama, will spur revenues. And while the company has gained substantial traction in wireless-Yahoo’s mobile e-mail service claimed 8.5 million users in the third quarter of 2006, according to figures from M:Metrics, dwarfing Gmail’s 2.3 million wireless users-executives said the company will continue to focus on broadening its mobile base, hoping to monetize wireless in the long-term.
“Mobile also continues to be a major focus for Yahoo. With the launch of several key new products and strategic partnerships, we have demonstrated our intention of becoming the No. 1 player in mobile, mobile search and mobile monetization,” said CEO Terry Semel in an earnings call transcribed by SeekingAlpha.com. “So we see this as a year of continuing to build a big audience, take early leadership in that and throughout this year you’ll find us doing a lot of work on advertising pieces and working with other clients to come up with what would be the best answer and the best way to go forward.”