Revenue for the quarter ended Sept. 30 rose 2 percent from a year earlier, to US$1.6 billion. Excluding fees and commissions paid to partners, revenue was $1.12 billion, shy of the $1.13 billion expected by analysts polled by Thomson Financial.
Profits more than doubled, but primarily on the strength of a gain from the sale of HotJobs. Net income grew 113 percent to $396 million, while earnings per share were up 126 percent to $0.29.
On a pro forma basis, excluding one-time items like the HotJobs gain, net income was $225.9 million, or $0.17 per share, exceeding analysts' consensus forecast by 2 cents.
Yahoo CEO Carol Bartz expressed satisfaction with the results. "We delivered a solid quarter with good display advertising revenue growth, big gains in operating income, and margins that were double what they were last year," she said in a statement.
However, Yahoo's performance again paled in comparison to that of its main rival, Google, which generated revenue of US$7.29 billion in its third quarter, up 23 percent year-on-year.
Google's net income grew 32 percent to $2.17 billion, while earnings per share rose 31 percent to $6.72. On a pro forma basis, Google's net income was $2.46 billion, or $7.64 per share, exceeding the analysts' consensus of $6.67 per share.
Yahoo and Google make most of their revenue from online advertising, a market that shrank a little in 2009 but has recovered in 2010.
In the U.S., online ad revenue grew 11.3 percent to US$12.1 billion during the first six months of the year, compared with the same period in 2009, the Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers (PwC) said recently.
That is the market's highest revenue total for a first semester, putting 2010 on track to reach the market's highest annual level, according to the latest Internet Advertising Revenue Report, from the IAB and PwC.
Yahoo's stock closed at $15.49 on the Nasdaq Exchange, down 2.73 percent, before the results were released Tuesday.
