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| UPDATED: 2006-04-19 |
 Yahoo Online Ads Offset Paid Search Drop 
By: David Utter 2006-04-19 The online portal company met analyst estimates of 11 cents earnings per share, but net income dropped from the same period in 2005.  Yahoo (YHOO) reported revenue of $1.08 billion after traffic acquisition costs for the first quarter of 2006. The company disclosed earnings of 11 cents per share on $160 million in net income, in line with analyst expectations.
Stock compensation expenses net of tax drove net income down compared with the same period in 2005. Q1 2005 net income of $205 million delivered earnings per share of 14 cents. Also in the first quarter of 2005, Yahoo's revenue after TAC was $821 million. "Our business strength allowed us to both invest close to $750 million in buying back stock this quarter while also investing in key operating initiatives that will enhance our solutions for our advertisers and our offerings for our user community," said Susan Decker, chief financial officer, Yahoo! Conventional wisdom says companies buy back stock when they feel it is undervalued, and issue more when it may be overvalued. Yahoo's buy back indicates confidence in its future business, particularly as it rolls out new search advertising technology that should improve its ad relevance as displayed to users. Advertising proved to be Yahoo's strength for the first quarter. Display advertising, that is, and not paid search, a category dominated even more by Google (GOOG). Yahoo has done well in marketing to significant brand-name advertisers. That hasn't carried over yet to the company's paid search business. "Yahoo is the largest destination for brand advertisers," Piper Jaffray analyst Safa Rashtchy told Bloomberg News ahead of Yahoo's earnings announcement. "Unfortunately, it has been overshadowed by search.'' Things certainly aren't glum in Sunnyvale, though. Yahoo purchased digital home company Meedio, a privately held Texas firm, SiliconBeat reported. Terms of that deal were not disclosed. In other earnings news, Big Blue showed investors some green. IBM (IBM) announced earnings of $1.71 billion for the first quarter, for $1.08 per share, thanks to cost-cutting measures implemented by the company over the past year. That cost-cutting, including last year's sale of its personal computing division to Lenovo Group, offset a drop of 10 percent in total revenues for IBM, to $20.7 billion for the period compared to the same time in 2005. "We had very strong results in middleware and continued revenue growth in microelectronics for our 300-millimeter wafer products that serve the major gaming platforms. Services signings increased, services margins rose for the seventh straight quarter year to year, and IBM again grew in emerging markets," IBM chairman and CEO Sam Palmisano said in a statement. Disk drive manufacturer Seagate Technology (STX) drove an 18 percent increase in shipments, 29.4 million units, for its fiscal third quarter to a 16 percent year-over-year revenue rise and a 20 percent leap in net income. Seagate reported quarterly revenue of $2.3 billion, net income of $274 million, and diluted earnings per share of $0.53. "These results compare to revenue of $1.97 billion, net income of $229 million and diluted earnings per share of $0.45 in the year-ago quarter," the company said. Also, Seagate announced availability of its Cheetah 15K.5 hard drives this week. The Cheetah uses Seagate's perpendicular recording technology, which lines up data bits vertically on the disk platter instead of horizontally. These drives could provide up to 300GB storage with a sustained transfer rate of 125MB/s according to Seagate. Texas Instruments (TXN) enjoyed a good start to 2006, its CEO and president Rich Templeton said. "Demand was strong, and we expect it to continue.” The high-tech component maker reported first-quarter 2006 revenue of $3.33 billion, up 23 percent from the same quarter in 2005. Earnings per share were 33 cents on net income of $542 million, up 57 percent year-over-year. Of special note, the company said its Q1 revenue roughly equaled that of Q4 2005. Usually Texas Instruments experiences its weakest revenue in the first quarter, but its semiconductor segment of the business accelerated for the third straight quarter, buoyed by demand for its mobile phone chips and a joint venture with Japan's top two cellphone makers for chip development in Japan. --- Tags: Yahoo, IBM, Seagate, Texas Instruments Add to | DiggThis | Yahoo! My Web | PreFound.com Bookmark IFN - 
View All Articles by David Utter About the Author: David Utter is a staff writer for InternetFinancialNews and WebProNews covering technology and business. |
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