Yahoo! Inc., owner of the second- ranked U.S. Internet search engine, reported profit that topped analysts’ estimates, bolstered by a rebounding online advertising marketing campaign and the sale of its Zimbra business.
First-quarter net income attributable to Yahoo more than doubled to $310.2 million, or 22 cents a share, from $117.6 million, or 8 cents, a year earlier, the company said today in a statement. Analysts in a Bloomberg survey had estimated 9 cents per share on average.
Advertisers are seeking out more space on Yahoo’s pages as the economy improves. The U.S. online advertising market will grow 13 percent this year, outpacing the 3 percent expected for total ad sales, according to Magna Global, a unit of Interpublic Group of Cos., the second-largest U.S. owner of ad agencies. That’s benefiting Yahoo, even as it remains a distant second to Google Inc. in search customers.
“You don’t have to be first to be a winner in this space,” said Scott Kessler, an equity analyst with Standard & Poor’s in New York. He has a “strong buy” rating on the stock, which he doesn’t own. “It still has a massive global audience.”
Excluding revenue passed on to partner sites, sales totaled $1.13 billion last quarter. Analysts had projected $1.17 billion on average.
The Sunnyvale, California-based company forecast gross revenue of $1.6 billion to $1.68 billion for the current quarter. Hamilton Faber, an analyst with Atlantic Equities LLP in London, had estimated $1.69 billion.
Yahoo rose 12 cents to $18.50 in late trading after the report. The shares, up 9.5 percent this year, closed at $18.38 on the Nasdaq Stock Market.
Yahoo has streamlined operations and cut costs under Carol Bartz, who became chief executive officer early last year. In February, Yahoo agreed to sell its HotJobs employment site to Monster Worldwide Inc. for $225 million. The previous month, Yahoo approved the sale of its Zimbra e-mail and collaboration software to VMware Inc. for an undisclosed price. Last year, Yahoo closed the Web-hosting unit GeoCities and an online storage site called Briefcase.
“They’re probably getting better focused,” Faber said. He has a neutral rating on the stock, which he doesn’t own.
Even as she offloads businesses, Bartz expects to make more acquisitions this year. Last month, the company agreed to buy Citizen Sports, adding mobile and social-networking features to its sports site. Citizen Sports lets customers check live scores on smartphones.
Yahoo gained ground in the U.S. Web-search market in March, reversing six months of declines, according to Reston, Virginia- based ComScore Inc. Google’s share slipped, though the Mountain View, California-based company remains dominant.
Yahoo’s share rose to 16.9 percent, up from 16.8 percent in February, ComScore said. Microsoft Corp.’s Bing gained to 11.7 from 11.5 percent, while Google declined to 65.1 percent from 65.5 percent.
Last July, Microsoft and Yahoo struck a 10-year agreement to team up against Google in the search market. Yahoo plans to use Bing on its sites and sell ads next to the results. The companies expect to finish integrating their Internet-search businesses by the end of the year.