The results won qualified praise from Wall Street analysts, though most acknowledged that Yahoo (YHOO) still has a lot of work to do to revive its business.
Yahoo's stock has risen more than 28% in the past six weeks but remains below its peak of $33.61 set in early May. "Yahoo outperformed in what was to be its trough quarter in 2007. The company had accelerating fundamentals in its search business, as a result of cleansing of the partner network and Project Panama improving [revenue per search] trends," wrote Jordan Rohan of RBC Capital Markets in a note to clients Wednesday. Rohan lifted his price target on the stock to $36 from $34.
Yahoo said third-quarter profits fell 5% from the year-earlier period. Net income for the three months ended Sept. 30 fell to $151.3 million, or 11 cents a share, from $158.5 million, or 11 cents a share, in the same period a year earlier. Meanwhile, total revenue rose to $1.77 billion from $1.58 billion.
Net sales, which exclude payments Yahoo makes to other Web sites to acquire traffic, rose to $1.28 billion from $1.12 billion.
"While we still have a lot more to do, we have taken some important steps and made strong initial progress," Yahoo Chief Executive Jerry Yang said in a conference call with analysts late Tuesday. "We have defined a vision of where we want to go" in terms of company strategy and culture.
It looks like Yahoo is starting its turnaround and Yang leads the company towards the right direction.
Also Yahoo announced a new search advertising partnership Tuesday with WebMD Health Corp. (WBMD) and new display advertising partnerships with Ziff-Davis Media and Forbes.com.
Back in July, newly CEO Yang pledged a 100-day-long effort to create a reorganization plan for Yahoo, in order to better position the company for competition with the likes of Google Inc.(GOOG). On Tuesday, he outlined something he termed "the starting point mission." Yang said the company will focus on properties where Web users tend to initially land, such as email, news and finance, making them more attractive while also more capable of routing users to other Yahoo services.
Yahoo is going to have some hard time competing with Google, though I really think Yahoo can innovate and contribute something to the market, and not just play cat and mouse with Google, the situation reminds me a little of Apple (AAPL) back in the 90's where they faced near bankruptcy and has been kicked by Microsoft (MSFT), until founder Steve Jobs returned to save his company and manged to turn it around, and today as we all now Apple is known and famous as one of the most innovative companies in the world.
According to data from ComScore Inc., Google captured a 56.5% share of the online search market in the U.S. in August, an increase from the prior month. Meanwhile, Yahoo had a 23.3% share.
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