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Yahoo pins mixed results on Microsoft buyout offer

updated 04:55 pm EDT, Tue July 22, 2008

Yahoo Q2 2008 Results

Yahoo this afternoon reported mixed results for its spring quarter that it blames in part on Microsoft's attempts to buy out the search engine firm. Although its pure revenue climbed six percent to approximately $1.79 billion between April and June with profits climbing slightly to $1.03 billion, the company says its actual operating income dropped a significant 45 percent to $101 million; nearly one quarter of this, or $22 million, was associated with the legal costs both with Microsoft's initial takeover and the recently-ended proxy takeover threat from billionaire Carl Icahn, who had boosted his stake in the company to nearly five percent in an attempt to help vote out Yahoo's board of directors.

The company also reports having lost 30 percent of its free cash flow, which now sits at $231 million, and saw its net income drop nearly 19 percent to $131 million. Yahoo president Sue Decker nonetheless describes the results as "solid" and explains that the company has added several key publishers to its site, including CNET and Wal-Mart, and is seeing success with newer projects such as Yahoo Buzz.

The mixed results are a reduced threat to Yahoo's board due to a deal with Icahn that sees him on Yahoo's board in exchange for recommending that all but one of the existing directors stay in their positions, but potentially casts doubt on the long-term health of the company. In defending its status as a company independent of Microsoft, Yahoo has argued that a strategy first put into place last year would result in eventual increased profits that have yet to appear.

Such a turnaround is believed to now hinge in large part on a Google AdSense deal which, if approved, would potentially see hundreds of millions of dollars in extra ad revenues for Yahoo as ads from Google and any future firms run alongside some of Yahoo's search results.

Microsoft hasn't commented on Yahoo's claims regarding the income drop.



By Electronista Staff
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