Yahoo Net Income Falls As Panama Lands

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Yahoo Net Income Falls As Panama Lands

By: David Utter
2007-01-23

The $269 million Yahoo realized in fourth quarter 2006 net income, for earnings of 19 cents per share, fell short of the year over year period in 2005.

Even discounting Yahoo's 2005 fourth quarter gains of $340 million from the deal it made with Alibaba for Yahoo China, along with other gains, the company would have still delivered $343 million in net income for the period.

A stock-based compensation expense of $56 million had a big impact in the quarter. In 2005, Yahoo only had $11 million in that expense for the same period.

That revenue difference left investors to contemplate a revenue increase to $1.7 billion for the quarter, up from $1.5 billion in the same period last year. They also had Panama, Yahoo's new advertising system, to consider.

Although Yahoo finished down during the trading day ahead of their earnings announcement, closing at 26.96, after hours trading saw them up to 28.50 at 5:49 pm ET.

Investors may be pinning their hopes on Panama. The long awaited advertising upgrade should offer better relevance for paid search advertisers.

That will be necessary for Yahoo if it expects to compete better with Google, as well as staving off competition from Microsoft and Ask.com in the same space.

Yahoo CEO Terry Semel said in today's conference call that they have moved "the large majority" of their existing advertisers to Panama. A formal launch of the product on February 5th should help Yahoo's fortunes through 2007.

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Tag: Yahoo

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