Yahoo meets earnings forecast; exceeds on revenue

Yahoo significantly increased its revenue and earnings in its third quarter, the result of what the company called an accelerated pace of development for new products and services, which in turn boosted Yahoo's advertising business.

Compared with last year's third quarter, Yahoo's revenue grew 154 percent to US$907 million. Meanwhile, net income rose to US$253.3 million, or US$0.17 per share, from US$65.3 million, or US$0.05 per share.

Excluding a one-time gain related to an investment sale and a resulting tax benefit, Yahoo's net income came in at US$124 million, or US$0.09 per share, meeting the consensus expectation from analysts polled by Thomson First Call.

Excluding traffic acquisition costs, which are revenue shared with and paid to affiliates of Yahoo's Overture unit, revenue came in at US$655 million, exceeding analyst consensus expectations by US$11 million.

Overture, which Yahoo bought in October 2003, sells online ads that run in a network of Web sites. Based on context, Overture matches the ads with Web pages in the network, meaning that ads for baseball gloves should appear in Web pages about baseball. The ads are also matched to search engine queries, so that a user who queries a search engine for "baseball gloves" should see contextually relevant ads.

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