Yahoo Q3 Financial Results Beat Expectations

Yahoo has reported its third quarter financial results, posting numbers that were slightly above expectations but still mostly down from last year. Revenue was at $1.575 billion, down 12 percent from last year's $1.786 billion, but net income was more than three times bigger thanks to a deep cost-cutting campaign.

“With revenue coming in above our guidance and flat sequentially, we had a solid third quarter that signals our major businesses have stabilized,” Yahoo Chief Executive Officer Carol Bartz said. “With new products like Yahoo! homepage, our brand revitalization campaign and expansion in the Middle East through Maktoob.com, our execution is improving and we're focused on what we do best - being the center of people's online lives.”

Revenue excluding partner fees was at $1.13 billion, above the expected $1.12 billion but lower than last year's $1.32 billion. Despite the significant drop in revenue net income grew to $186 million, up from $54 million last year. The rise in income is attributed to job cuts and the number of properties Yahoo has been closing down for the past year but it remains to be seen if this strategy will work out in the long run.

Advertising revenue was mostly down as search ads continued to drop, losing another 19 percent this quarter after a 15 percent drop in the second quarter. This while Google's search ad revenue rose as the market is beginning to pick up. Yahoo has sold its search business to Microsoft and Bing will replace the underlying technology powering Yahoo Search but for the time being the deal hasn't been approved by the regulatory bodies and it looks like the uncertainty has affected advertisers' confidence. Display ads fared better but still dropped 8 percent year over year. This comes after a 14 percent drop in the last quarter but some analysts were expecting the drop to be as much as 20 percent. Interestingly though, its own spending on marketing actually dropped by 28 percent this quarter despite starting a $100 million ad campaign.