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Yahoo's 3Q Profits Exceed Expectations

Company reports 50% revenue gain, better-than-expected earnings.
Yahoo Inc. soared above the difficult economy in its third quarter, reporting solid earnings and a 50% boost in revenue.

Yahoo on Wednesday reported revenue for the quarter ended Sept. 30 of $248.8 million, up from $166.1 million for last year's third quarter. Net income was $28.9 million, or 5 cents a share, compared with a loss of $24.1 million last year. The per-share earnings beat Wall Street's consensus by about 1 cent. The results are a "strong validation of the course we've set for this company," said Terry Semel, Yahoo's chairman and CEO. "We believe Yahoo is on a very healthy growth path." Semel, formerly co-head at Warner Bros., was tapped to lead Yahoo in April 2001 during a financially difficult time for the company.

Yahoo's marketing-services division increased its revenue by 22% to $147.4 million, primarily due to sales of its search and sales services to small and midsize businesses. Some 20,000 merchants now use the Yahoo Store platform, Semel said. Consumers also played a part in Yahoo's quarter: New listings on Yahoo Personals and subscriptions to its consumer Internet service, SBC Yahoo Dial, helped boost revenue for its fees and listings business by 124%, to $83.1 million. Without the addition of revenue from HotJobs, acquired earlier this year, revenue for that business was up 66%.

One of Yahoo's goals going forward is to improve its Internet search engine, Semel said. The company made some improvements to the search engine effective Wednesday and has struck a long-term, nonexclusive agreement with Google that Semel said will help it bring further enhancements, including innovative features and new ways to search for products.