Yahoo (YHOO) shares are trading higher today after the company posted modestly encouraging Q3 results. Revenues for the quarter, while down 12% year-over-year (down 7% adjusted for currency and various one-time items) were about flat sequentially, and matched Street forecasts. And profits were nicely ahead of expectations, largely due to lower than expected expenses and one-time gains. The guidance for Q4 calls for a modest improvement in revenue sequentially, but nothing too impressive; the Street expects revenue for the quarter to be down 11% year-over-year.
The most encouraging news was in the display sector, where revenues were down 8% year over year; that hardly sound like reason for a victory dance, but the percentage drop was much lower than the mid-teens level the Street had expected. On the other hand, search ad revenue disappointed, down 19%, which was worse than Street expectations, and largely a reflection of reduced revenue per search. (The number of queries actually increased in the quarter.)
The pressure is now on the company to deliver some clarity on its financial and strategic future when execs meet with the Street next week.
Do the results really provide a reason to celebrate? Here are a couple of things to consider:
YHOO today is up 65 cents, or 3.8%, to $17.82.
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Tech Trader Daily is a blog on technology investing written from Palo Alto, California by long-time Barron's West Coast Editor Eric J. Savitz. The blog provides news, analysis and original reporting on events important to investors in software, hardware, the Internet, telecommunications and related fields. Comments and tips can be sent to: techtraderdaily@barrons.com.
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