Yahoo!'s second-quarter profit increased more than sixfold as the owner of the Internet's most popular Web site cashed in on a hefty investment...
SAN FRANCISCO — Yahoo!’s second-quarter profit increased more than sixfold as the owner of the Internet’s most popular Web site cashed in on a hefty investment gain and continued to parlay its expanding audience into an advertising bonanza.
But the results released yesterday weren’t enough to satisfy Wall Street, largely because Yahoo!’s earnings growth came mostly from selling the remaining chunk of its stake in its archrival, online search leader Google.
Yahoo!’s stock plunged more than 10 percent in extended trading as investors expressed dismay with a quarter that revealed slowing growth of the company’s operating profit.
The Sunnyvale, Calif.-based company earned $754.7 million, or 51 cents a share, during the three months ended in June. That compared with a profit of $112.5 million, or 8 cents per share, a year earlier.
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Revenue totaled $1.25 billion, a 51 percent increase from $832.3 million last year. After subtracting the commissions Yahoo! paid to other Web sites in its advertising network, the company’s revenue stood at $875 million, up 44 percent from last year.
The profit included a gain of $563 million, or 38 cents a share, from selling Google shares, which have soared 61 percent so far this year.
Yahoo! acquired the stake by investing in its rival’s early development and a subsequent patent settlement over the way search engines distribute advertising. Yahoo! announced its results after the stock market closed. Its shares rose $1.15, or 3.1 percent, to finish at $37.73, and then plunged $3.82, or 10 percent, in extended trading.
Even as investors punished the company, Yahoo! CEO Terry Semel hailed the results as the latest chapter in a continuing success story. “This is a very exciting time for our company,” he told investors during a conference call. “We have a balanced and healthy business model in which all parts are performing well.”
Yahoo! ended June with 181 million active registered users, a 23 percent increase from the same time last year. The audience included 10.1 million subscribers, a 58 percent increase from last year.
Despite its success, Yahoo! has been largely overshadowed by Google, which has been riding its Internet-leading search engine to even more robust earnings growth.
Lifted by the rapid appreciation of its stock this year, Google ended yesterday with a market value of just under $90 billion while Yahoo!’s stock, through yesterday’s trading, on Nasdaq, had inched up by less than 1 percent this year to nudge the company’s market value to $56 billion.
There is a contingent of analysts who believe Yahoo! is better positioned than Google because it isn’t as dependent on a search engine for all of its profit.
But search-engine advertising remains the Internet’s financial hot spot, and Yahoo! still hasn’t been able to make a significant dent in Google’s lead. Through June, Google had a 36.9 percent share of the U.S. market, outdistancing Yahoo!’s 30.4 percent share, according to comScore Networks.
drives down results
Ford Motor’s profit fell 19 percent in the second quarter, hurt by lower production and harsh competition in North America, where it lost more than $900 million. And the company’s overall automotive outlook isn’t much rosier for the rest of the year.
The nation’s second-largest automaker said yesterday it earned $946 million, or 47 cents a share, in the April-June period versus a profit of $1.2 billion, or 57 cents a share, a year earlier.
Excluding special items, Ford earned $936 million, or 47 cents a share, in the latest quarter, compared with $1.2 billion, or 61 cents a share, in the same period last year.
Once again, Ford’s finance arm carried the automaker, pumping more than $1 billion toward the bottom line. Chief Financial Officer Don Leclair acknowledged the company expects to post a full-year loss on the automotive side of the business, dragged down by North America.
To start the year, Ford said it expected its global automotive business to generate a pretax profit in the range of $1.5 billion to $2 billion, up from $850 million in 2004. In the spring, it lowered its guidance to “break even at best.”
Motorola, the world’s No. 2 maker of mobile phones, bettered Wall Street’s expectations yesterday by reporting second-quarter profit of $933 million, reflecting continuing strong sales of its Razr and other new products.
It was the seventh consecutive solid quarterly performance by once-struggling Motorola, whose results early in the earnings reporting season are considered a bellwether for the tech sector.
The Schaumburg, Ill.-based company said it had picked up 1.7 percent in market share since the first quarter, racking up 18.1 percent of global cellphone sales. Finland’s Nokia remains the runaway overall leader.
Profit for the April-through-June quarter was $933 million, or 37 cents a share. Sales rose 1.5 percent to $8.83 billion from $8.7 billion. That easily exceeded analysts’ estimate of $8.55 billion.
rises on drug sales
Amgen said yesterday second-quarter profit rose 38 percent on strong demand for its anemia and arthritis treatments.
Due to its strong first-half performance, Amgen boosted its 2005 earnings forecast, excluding items, to a range of $3.10 to $3.20 a share from $2.80 to $2.90 per share.
The Thousand Oaks, Calif.-based biotechnology company said it posted a profit of $1 billion, or 82 cents a share, compared with a profit of $748 million, or 57 cents a share, in the year-ago quarter.
Combined sales of the company’s two drugs that prevent infection in chemotherapy patients, Neulasta and Neupogen, rose 25 percent to $899 million in the second quarter.
Sales of its rheumatoid-arthritis drug Enbrel increased to $639 million in the quarter, a 45 percent increase over the same period last year.
Reuters contributed the Amgen report