Increase due to higher demand, more time spent by users

Yahoo! was once again the first media company to report its earnings in the new year, and it has set a high standard, more than doubling revenue in 2004, thanks in large part to a boom in online advertising.

Topper Terry Semel pointed to a number of growth factors for the year, including Net partnerships with Mark Burnett Prods.’ “The Apprentice,” Paramount TV for “Entertainment Tonight” and digital cartoon producer JibJab. Company recently signed former ABC exec Lloyd Braun to head up its growing slate of entertainment content.

But it was increased marketing revenue, driven by higher demand and more time spent by users, that primarily pumped the company’s revenues.

In 2004, “We witnessed the beginning of a tipping point in advertising,” Semel said.

Marketing revenue was up 150% from 2003 to $3 billion, contributing 84% of Netco’s total $3.57 billion in revenue, which was up 120% from a year ago.

Net income for 2004 was $526 million, excluding gains from the sale of stock in competitor Google. That’s more than double the profit of 2003.

For the fourth quarter, Yahoo!’s revenue was up 62% at $1.1 billion and net income was $187 million, excluding the Google stock sale, up from $75 million in 2003.

Yahoo! invested a total of $755 million in acquisitions in 2004, most recently on digital music company MusicMatch, which it hopes to use to better compete with Apple’s iTunes.

Nevertheless, strong free cash flow let Yahoo! nearly double its cash hoard to $1.4 billion. Chief financial officer Susan Decker said Yahoo! plans to continue to invest in acquisitions as well as marketing for upcoming launches of major products, for which she didn’t provide details.

For 2005, Yahoo! expects its revenue, excluding costs it pays to content partners, to be between $3.36 billion and $3.56 billion, up from $2.6 billion in 2004. Operating income before depreciation and amortization is slated to grow from $1.03 billion in ’04 to between $1.39 billion and $1.49 billion in ’05.

Yahoo! shares closed up 1% at $37.18 on Tuesday before earnings were announced.

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