As Profit Dives, Yahoo Plans To Cut Jobs; Apple Posts Gain

Technology giants Yahoo and Apple yesterday reported sharply contrasting quarterly results, with Yahoo announcing a 64 percent drop in profit and plans to cut 1,500 jobs.

Yahoo's disappointing results, particularly after Google last week reported a 26 percent jump in profit to $1.35 billion in the previous quarter, signaled that the company is falling further behind in the search market, according to analysts.

The results will likely roil investors who have seen Yahoo's stock price plummet to about one-third its value when Microsoft made its takeover bid at $33 a share last spring, analysts said.

"Yahoo's got some stormy days ahead because hubris can only take you so far," said Allen Weiner, a research director at Gartner Group. "Not taking the Microsoft offer is going to haunt them significantly moving forward, and they are not going to receive an offer like that forthcoming."

The job cuts at the Sunnyvale, Calif., firm represent 10 percent of its workforce and will be part of a plan to reduce costs by $400 million this year, according to Yahoo chief executive Jerry Yang.

He blamed the decline in income on weaker ad spending by companies that buy online displays.

In response, Yang said the company will focus on cutting costs in order "to deliver for users and advertisers even in this more difficult climate."

Yahoo expected revenue of $7.18 billion to $7.38 billion for 2008, down from a previous forecast of at least $7.35 billion.

In the third quarter, Yahoo earned $54.3 million, or 4 cents a share, far below estimates of 9 cents a share, according to a survey of analysts by Thomson Reuters. Revenue rose 1 percent, to $1.79 billion. After subtracting commissions paid to advertising partners, Yahoo said its revenue stood at $1.32 billion -- about $50 million below analyst estimates.

The company absorbed $37 million in operating costs during negotiations with Microsoft.

Although many of Yahoo's problems can be attributed to the economy, the firm's continued focus on banner ads instead of targeted search advertising has placed it at a strategic disadvantage, Weiner said.

"I'm looking for some silver lining, and it's hard to find one," Weiner said.

Apple, meanwhile, reported a 26 percent jump in profit, to $1.14 billion, or $1.26 a share, compared with analysts' average expectations of around $1.11 a share. The company said revenue rose 27 percent, to $7.9 billion, on strong demand for Mac computers, iPods and sales of 6.9 million iPhones in the quarter. The firm, a bellwether for consumer electronic demand, warned that the global economic crisis could affect consumer demand going forward.

Yesterday, Apple predicted revenue for its coming quarter of $9 to $10 billion; for the same quarter a year ago, the company brought in revenue of $9.6 billion.

The conservative forecast came even as the company reported that it had sold more Mac computers than ever during its previous quarter, and that the new iPhone had sold more units in a quarter than its predecessor had sold in a year.

"Looking ahead, visibility is low and forecasting is challenging," said Apple Chief Financial Officer Peter Oppenheimer in a conference call with analysts and investors.

Apple's chief executive Steve Jobs usually doesn't speak during his company's earnings report calls, though he spoke to investors and analysts yesterday.

Apple has $25 billion and no debt, he said. "We may get buffeted around by the waves a little bit," he said, "but we'll be fine."