Internet pioneer Yahoo Inc’s first-quarter earnings rose a better-than-expected 28%, driven by cost controls and profits from overseas investments, as investors awaited more information about the company's on-going restructuring.
The net earnings of the California based company rose to a whopping $286 million in the January-March quarter of 2012 mainly by higher search revenues compared to $223 million in the year-ago period.
The company’s revenue excluding traffic acquisition, costs commissions paid to partners increased to $1.08 billion. “In the first quarter, Yahoo’s results came in at the high end of our guidance range and beat consensus on revenue and profits,” Yahoo CEO Scott Thompson said.
He further added, “We also made changes to resize the organisation and establish a new leadership structure to quickly deliver the best user and advertiser experiences at scale,”
With 700 million users, Yahoo has been struggling to increase its share in the internet market amid tough competition from Google and Facebook. Earlier this month the firm said it planned to cut 2,000 staff, 14% of the workforce. Yahoo expects its cost-cutting programme to save $375m (£236m) a year.
During the quarter, Yahoo’s core display-advertising business was down 4% to $454 million, while search revenue surged by 8% from year-earlier to $384 million in the first quarter of 2012.
Looking ahead, Yahoo expects revenues between $1.03 billion and $1.14 billion, excluding commissions paid to marketing partners for the second quarter. Overall, revenues for the second quarter are expected to be in a range of $1.17 billion to $1.29 billion.
The increase in the profit has been seen since, the arrival of the new CEO who took over in January. Thompson’s credibility has got a boost as he is trying to turn around the long-sputtering Internet company.In Thompson's first full quarter as CEO, Yahoo earned $286 million, or 23 cents per share. That represented a 28 percent increase from net income of $223 million, or 17 cents per share, at the same time last year.
Thompson told analysts Tuesday that the cuts needed to be made because Yahoo had grown too unwieldy. He also said he is in the process of trying to sell about 50 Yahoo products and services that weren't attracting enough traffic to the company's website or producing enough revenue. As Thompson overhauls Yahoo's operations, he is also trying to appease shareholders by selling a portion of the company's roughly 40 percent stake in the China's Alibaba Group
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