Yahoo! Inc. Earnings Cheat Sheet: Margins Expand For Fifth Straight Quarter, but Net Income Falls

S&P 500 (NYSE:SPY) component Yahoo! Inc. (NASDAQ:YHOO) posted a decrease in profit as revenue declined. Yahoo is a digital media company that delivers personalized digital content and experiences across devices worldwide.

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Yahoo Earnings Cheat Sheet for the Third Quarter

Results: Net income for the internet information provider fell to $293.3 million (23 cents per share) vs. $396.1 million (29 cents per share) a year earlier. This is a decline of 26% from the year earlier quarter.

Revenue: Fell 24% to $1.22 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: YHOO reported adjusted net income of 21 cents per share. By that measure, the company beat the mean estimate of 17 cents per share. It beat the average revenue estimate of $1.07 billion.

Quoting Management: “We’re pleased that revenue, operating income and EPS were all above consensus this quarter,” said Tim Morse, CFO and Interim CEO, Yahoo!. “My focus, and that of the whole company, is to move the business forward with new technology, partnerships, products, and premium personalized content – all with an eye toward growing monetization.”

Key Stats:

Last quarter marked the fifth consecutive quarter of gross margins expanding as the company’s gross margin expanded 13 percentage points to 70.5% from the year earlier quarter. Over that span, margins have grown on average 9.6 percentage points per quarter on a year-over-year basis.

The company has now topped analyst estimates for the last four quarters. It beat the mark by one cent in the second quarter, by 3 cents in the first quarter, and by 4 cents in the fourth quarter of the last fiscal year.

Revenue has fallen in the past four quarters. Revenue declined 23.3% to $1.23 billion in the second quarter. The figure fell 24% in the first quarter from the year earlier and dropped 11.9% in the fourth quarter of the last fiscal year from the year-ago quarter.

Net income has increased 34.8% year over year on average across the last five quarters. The biggest gain came in the third quarter of the last fiscal year, when income climbed more than twofold from the year earlier quarter.

Looking Forward: Analysts appear increasingly negative about the company’s results for the next quarter. The average estimate for the fourth quarter has moved down from 24 cents a share to 22 cents over the last ninety days. The average estimate for the fiscal year is 74 cents per share, down from 78 cents ninety days ago.

Competitors to Watch: Google Inc. (NASDAQ:GOOG), Microsoft Corporation (NASDAQ:MSFT), AOL, Inc. (NYSE:AOL), IAC/InterActiveCorp (NASDAQ:IACI), Rediff.com India Ltd. (NASDAQ:REDF), Sohu.com Inc. (NASDAQ:SOHU), Baidu.com, Inc. (NASDAQ:BIDU), InfoSpace, Inc. (NASDAQ:INSP), Intl. Business Machines Corp. (NYSE:IBM), and Demand Media Inc (NYSE:DMD).

Investing Insights: Amazon.com has a Stock Chart Technical Analysts Dream About.

(Source: Xignite Financials)