Yahoo Profit Jumps; Shares Slide

Yahoo Inc. said yesterday that its fourth-quarter profit nearly doubled and revenue was up almost 40 percent, but Wall Street viewed the earnings report as disappointing and sent the Web portal's stock tumbling by more than 13 percent in after-hours trading.

For the quarter that ended Dec. 31, Yahoo said it earned $683.2 million, compared with $372.5 million for the comparable period in 2004. For the 2005 fiscal year, the Sunnyvale, Calif.-based company earned $1.9 billion, compared with $839.6 million the previous year.

Yahoo executives credited the increase to advertisers moving to the Internet and said advertiser spending could double for the company within the next two years.

Analysts agreed that online advertising sales in the United States would probably see substantial increases, with the fastest growth coming from search-based ads. In that arena, Yahoo's market share slipped to 19 percent in November from 27 percent a year earlier. Google Inc. saw its share jump to 60 percent from 47 percent.

Financial analysts had expected earnings of 17 cents per share, excluding one-time gains and tax benefits. Yahoo missed that forecast by a penny, and its stock plummeted $5.15 in after-hours trading to $34.96.

Simply, analysts said, Yahoo's quarter wasn't good enough to wow Wall Street.

"What's disappointing about it is they didn't really trump people's expectations," said Oppenheimer & Co. analyst Sasa Zorovic. "People are now saying: 'Look, I was anticipating more. I didn't get what I anticipated, so I'm going to scale back.'

"For Yahoo, people always hope they will become more like Google, and this quarter was not Google-like," he said. "Google definitely beats and raises expectations. Yahoo was more ho-hum in that sense."

Google is scheduled to report its quarterly results Jan. 31.

In an interview, Yahoo's chief operating officer, Daniel Rosensweig, wouldn't discuss the stock market's reaction to the earnings report. "We don't comment on what other people expect," he said. "From our standpoint, we had a terrific quarter and a terrific year."

In a conference call with analysts, chief executive Terry S. Semel spoke mostly about emerging technologies and future opportunities for the company, focusing on a "significant platform shift" in which new users will access the company's services over cell phones and other mobile devices.

"Users expect their experiences across all their devices to be seamlessly integrated," he said. "This generation -- they don't see this as a paradigm shift; they see it as a way of life."