Yahoo released its Q4 05 earnings today and, against the backdrop of stellar financial performance for the quarter and the full year, the Internet giant disappointed investors with weaker-than-expected guidance for 2006. Revenues for the quarter were $1.5 billion, up 39% year-over-year, while net income was $247 million, or $.16/share compared to $187 million, or $.13/share, a year-ago.
Investors’ antennae were raised with the $.16/share given that it fell a penny short of expectations. But more troubling are Yahoo’s projections for Q1 and full-year 2006 revenues — the company expects first quarter revenues to be lower, around $1.04 to $1.4 billion, while annual revenues are slated to reach $4.6 billion to $4.85 billion, down from $5.26 billion for 2005, due in part to a “realignment” of search partners, such as MSN, which will decrease its use of Yahoo’s search technology.
While these estimates aren’t far off from Wall Street consensus, investors want strong growth and surpassed expectations, which Yahoo didn’t deliver. Still CEO Terry Semel praised the company’s performance, saying during Yahoo’s earnings call that “we accomplished all this while continuing to pursue emerging opportunities that we believe in the long term will help sustain our revenues.”
Despite the weak start to the year, Yahoo isn’t backing away from its development efforts. “There is a significant platform shift…now is the time to make investments in new audiences, new ways to engage them and create new opportunities,” Semel said.
However, Semel did seem lukewarm on the idea of Yahoo spending a lot of money to create TV-type entertainment programming, a notion raised by reports that the Internet portal titan might spend $20 million on a web-based TV series that was disbanded by ABC. “We will do a little of that [spend money on video entertainment production]…then ultimately really look for more and more outside companies look to us as a partner of choice,” Semel said.
Cynthia Brumfield at 6:21 PM|Comments(0)
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