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Yahoo Profits Through Cost Cutting Operating Expenses

Yahoo Profits Through Cost Cutting Operating Expenses

The beleaguered Yahoo was able to squeeze out a profit thanks to the continued cutting of operating expenses under the auspices of CEO Carol Bartz, according to a third-quarter earnings report that the company posted after the market closed on Tuesday. With earnings of 29 cents per share, it was able to beat Wall Street analysts' (admittedly low) expectations once again.

The company posted revenues of $1.12 billion excluding traffic acquisition costs, down slightly from $1.13 billion in the third quarter of last year. Display advertising on Yahoo-owned sites was up 17 percent year-over-year. In this quarter, Yahoo completed its sale of HotJobs to Monster.com, which gave its earnings an extra kick in what otherwise would've been notably slow growth.

"We delivered a solid quarter with good display advertising revenue growth, big gains in operating income, and margins that were double what they were last year," Bartz said in an earnings release. "Because we recognize the tremendous value of our assets, we also dramatically stepped up our stock repurchases. We've now bought back more than 7 percent of the company's stock this year alone."

Yahoo also transitioned its search product to Microsoft-powered technology in September, and made a number of strategic acquisitions like Associated Content and Dapper.

But it continues to be the subject of rumors that it's hunting for a parent company or partner in a merger, and the company still hasn't seen good signs of the takeover with which Bartz was tasked when she assumed the CEO role two years ago.

The company says it's still on the right track.

"We've made substantial progress this year toward executing our strategies for enhancing profitability and resuming revenue growth. Margins are expanding; owned and operated display advertising is up 18 percent so far this year; product rollouts are accelerating thanks to modernization of our underlying platforms; and we continue to implement our search alliance with Microsoft on schedule," Bartz commented in the release.

"We've disposed of non-core assets while making strategic acquisitions like Associated Content and Citizen Sports, and we've developed key partnerships with Facebook, Twitter, and Zynga to enhance the Yahoo experience for our 600 million users."

In a conference call later on Tuesday afternoon, Bartz said that "we're working to reverse years of decelerating growth" and blamed much of the difficulty on subpar technology: "Our legacy platforms just weren't able to scale...(It was) complex, time consuming, and expensive to get a feature or product to market."

According to Bartz, planned revamping and streamlining of Yahoo's platform should be complete by next summer.


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