Yahoo Inc. reported last night a quarterly net profit that more than tripled from the year earlier, boosted by the sale of shares it held in rival Google Inc. and stronger online ad revenue that analysts said may signal good results from other Web search providers.
Yahoo shares were trading higher after hours following the release of earnings.
Internet media company Yahoo is seen as a bellwether for both online advertising and for the performance of Google, which later this month will report financial results for its first time as a public company.
"It seems that the biggest source of upside surprise was search advertising," American Technology Research analyst Mark Mahaney said of Yahoo's third-quarter numbers.
Such results bode well for Web search leader Google, as well as for second-tier players like Ask Jeeves Inc. and FindWhat.com, which get most of their revenues from search-based ads, Mahaney said.
Sunnyvale, California-based Yahoo posted quarterly net income of $253.3 million, or 17 cents per share, including a gain of $129 million from the sale of a quarter of its Google shares and associated tax benefits.
Yahoo earned $65.3 million, or 5 cents per share, in the third quarter of 2003, when it was still sharing revenue with search advertising company Overture Services, which it bought one year ago as part of a $1 billion investment in search.
Revenue, excluding the fees Yahoo pays to its advertising partners, was $655.4 million, up from $356.8 million last year, to beat analysts' average call of $644.7 million.
Revenue from Yahoo's key marketing services segment, which includes search and traditional advertising, rose 212 per cent, reflecting the Overture acquisition. Yahoo had 7.6 million paid subscribers, up 1.2 million from the prior quarter.