Yahoo! Profit Top Estimates

(RTTNews) - Yahoo! Inc. (YHOO) said Tuesday its third-quarter profit plunged from a year ago, when it recorded huge gains from sale of shares in Alibaba Group. Meanwhile, revenue came in almost flat, with display business under pressure and prices for clicks and advertisements slumped.

Excluding one-time gains, Yahoo!'s adjusted earnings topped Wall Street estimates, while revenues were in line with expectations.

"I'm very pleased with our execution, especially as we've continued to invest in and strengthen our core business," said Yahoo CEO Marissa Mayer.

Despite pressures at its display business, Yahoo! shares have rallied this year mainly on reports that Alibaba Group, in which Yahoo has a huge stake, will come out with an initial public offering.

Also investors seem to have reposed faith in CEO Mayer, who has somewhat rejuvenated the struggling Internet giant amid stiff rivalry from Google and the likes of Facebook.

Mayer, a former Google executive, is into her second year at the top at Yahoo! and is credited with growing its user base, now at about 800 million monthly active users. But Mayer feels it will take the company at least three years to recover significantly.

Mayer has ramped up the Yahoo! homepage, made acquisitions and is keen to tap the potential for mobile technology. Yahoo! also plans to invest further in technology and video offerings.

During the third quarter, Yahoo made eight acquisitions to strengthen its products, content offerings, core technology and talent, including Bignoggins, Qwiki, Xobni, Admovate, and Rockmelt. Also, in June, Yahoo! closed its $1.1 billion acquisition of New York-based social media network Tumblr.

Yahoo!, based in Sunnyvale, California, posted quarterly revenue of $1.14 billion, down 5 percent from $1.2 billion last year.

Excluding traffic acquisition costs, or ex-TAC, - the fees shared with partners - revenues for the quarter were $1.08 billion, compared with $1.09 billion in the prior year. On average, 29 analysts polled by Thomson Reuters expected revenues of $1.08 billion for the quarter.

At Search business, revenues ex-TAC grew 3 percent to $426 million. While paid clicks rose 21 percent, price-per-click was down 4 percent.

Display business revenues ex-TAC slid 7 percent to $421 million, and price-per-ad fell 7 percent.

Yahoo! reported quarterly net earnings of $297 million or $0.28 per share, down from $3.16 billion or $2.64 per share last year.

Results for the prior-year quarter included a net gain of $2.8 billion related to the sale of Alibaba Group shares.

Excluding items, adjusted earnings for the quarter were $358 million or $0.38 per share, compared with $470 million or $0.39 per share a year ago. Analysts had a consensus earnings estimate of $0.33 per share for the quarter. Analysts' estimates typically exclude special items.

Separately, Yahoo! said it has amended the share repurchase and preference sale agreement with Alibaba Group. The amendment reduces the maximum number of shares of Alibaba Group that Yahoo is required to sell in connection with a qualified IPO of Alibaba, from 261.5 million shares to 208 million shares.

YHOO closed Tuesday at $33.38, down $0.62 or 1.82%, on a volume of 31 million shares on the Nasdaq. In after hours, the stock gained $0.12 or 0.36%, to trade at $33.50. In the past year, the stock trended in a range of $15.74 - $35.06.