Yahoo! Q1 profit surges on search deal, upturn in ad business

Yahoo! Q1 profit surges on search deal, upturn in ad business

New York: Internet major Yahoo! has registered nearly three-fold growth in its net income to $310 million during the three-month period ending 31 March 2010, helped by an uptick in the online advertising business and its search deal with Microsoft.

The company had a net income of $118 million in the corresponding quarter of the previous year, Yahoo! said in a statement.

Revenue was $1.59 billion for the first quarter of 2010, a 1% increase from the same quarter last year, it said.

“We had a good quarter, delivering income from operations higher than our outlook," Yahoo! CEO Carol Bartz said.

“Thanks to our efforts, our search share has stabilised and we grew display advertising by 20% year-on-year. More importantly, guaranteed display grew by 24% as advertisers took advantage of the science, art and scale that only Yahoo! can offer," she added.

The company’s first quarter profits reflect Yahoo!’s revenue-sharing search deal with Microsoft, which launched in February. As per the agreement, Yahoo’s website uses Microsoft’s Bing search engine and the two companies share the revenues.

Yahoo! gained $43 million from Microsoft as one-time “net transition cost reimbursement" for expenditure the company incurred in 2009 as well as in the first quarter of 2010. In addition, Yahoo! received $35 million from Microsoft for search operating costs during the quarter.

Revenues of $875 million from Yahoo!’s owned and operated sites were flat compared to the figure of $872 million for the same period of 2009. This was despite a 20% increase in display advertising revenue.

Further, Yahoo!’s revenues from affiliate sites rose 7% in comparison to the previous year to $548 million in the January-March period of 2010.

The Internet company expects revenue in the range of $1.6 billion to $1.68 billion in the second quarter of the year.