Reflecting a strong rebound in Internet advertising, Yahoo Inc. reported sharply higher first-quarter revenue and profit yesterday.
The online media giant reported earnings of $101 million, or 14 cents per share, up from $46.7 million, or 8 cents a share, last year. Revenue was $758 million for the quarter ended March 31, more than double the $283 million in revenue a year ago.
Yahoo is considered a bellwether for the Internet industry. Analysts said its recent success bodes well for Internet advertising, which fell dramatically for two years after the stock market tanked in 2001.
"It was a very substantial quarter for Yahoo," said Derek Brown, an analyst with Pacific Growth Equities LLC. "There is a perception out there that online advertising is showing signs of life. The reality is it was showing signs of life almost two years ago and now the online advertising market is quite robust."
Yahoo's revenue jump came partly from last year's acquisition of Overture Services Inc., which provides search-related advertising to Yahoo's network and to rivals such as Microsoft Corp.'s MSN. But Yahoo executives noted that all of its revenue sources -- including banner and display ads, listings from HotJobs and online personals, as well as fees for premium services -- rose in the quarter.
The Sunnyvale, Calif., company also announced a 2-for-1 stock split, effective May 11, and said it would launch a new national advertising campaign today highlighting its offerings in music, shopping and Web search.
According to the Internet Advertising Bureau, Internet ad spending rose 20 percent during 2003, to $7.2 billion, and by 38 percent in the fourth quarter, to $2.2 billion. Among the fastest-growing segments was Web search, consisting of text ads shown beside search results. Yahoo moved aggressively to compete with Google in Web search last year by purchasing its own search technology.
Yahoo chief executive Terry S. Semel said the number of active Yahoo users -- defined as someone who uses it at least once a month -- rose to 141 million during the first quarter, up 26 percent from last year.
Yahoo's quarterly ad revenue, from both search and display ads, totaled $635 million, $208 million of which Yahoo had to fork over to other Web sites that showed Overture's search ads. Revenue from fees totaled $88 million and listings revenue was $34 million.
Chief Operating Officer Daniel Rosensweig said in an interview that advertisers are no longer wondering whether they should use the Internet but rather trying to figure out how to use it more effectively.
"What we are seeing is that advertisers are staying longer, they are spending more on each insertion and they are continuing to renew at extremely high levels," he said.
