Yahoo Say Boohoo As Earnings Slide
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Yahoo! Inc. report 28 percent earnings slide and “flat” growth as revenue sharing with Microsoft hits bottom line.

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Total revenue excluding “traffic acquisition costs” was $1,064 m for the first quarter, a 6 percent drop compared to last year, which it attributed the “revenue share search agreement” it has with Microsoft.

Net earnings dropped a dramatic 28 per cent from $310m to $223m for Q1 2011.

Revenue growth was for the first quarter of 2011 was “flat” it said in a statement today. 

Microsoft retains 12 percent of the net search revenue generated on Yahoo! Pproperties and affiliate sites, an agreement which kicked in last October, designed to cut operating costs.

However, display revenue after traffic costs, which refers to marketing costs paid to partners, did increase 10 percent to $471m, although its search revenue fell 19 percent to $357m.

Other factors attributing to the falling revenue figures included “the impact of the divestitures of Zimbra and HotJobs and certain fee rate reductions.”

Income from operations increased by 1 percent to $190m, a jump of $2m from the same period a year ago.

Net earnings were $0.17 per diluted share, down from  $0.17 y-o-y.

However, in spite of the flat figures, the search giant remains confident, calling itself “the world’s premier digital media company” despite the market domination Google has over the market. 

“We are solidly executing toward our plan for returning Yahoo! to sustainable revenue and profit growth,” said Carol Bartz, CEO of Yahoo!.


It also beat the midpoint of revenue guidance while delivering on the bottom line, it said today.

“We continued to extend our lead as the world’s premier digital media company with users to Yahoo! branded properties increasing 15 percent year over year and minutes spent increasing 17percent.”

However, the company enjoys considerable success in Australia, operating as Yahoo!7, in a joint venture between the Seven network and Yahoo, which reported profits of $22m and revenue of $91.5m last year.