Q4 revs up 39%, but market wants more

A 39% boost in revenue and near doubling of net income didn’t meet Wall Street’s expectations for mega-portal Yahoo, as its shares fell 12% in after-hours trading following its earnings report.

The market showed disappointment with fourth-quarter performance even though it hit the company’s guidance, as well as predicted earnings for 2006.

Terry Semel-led Netco reported fourth-quarter revenue up 39% to $1.5 billion compared with a year ago, and net income up 83% to $683 million. Revenue from advertising and user fees both rose about 39%. Marketing income accounted for $1.315 billion, or about 88% of total revenue.

For all of 2005, Yahoo revenue rose 47% to $5.26 billion, while net income jumped 126% to $1.9 billion.

For 2006, Netco’s guidance calls for $4.6 billion to $4.85 billion of revenue excluding the costs it pays to affiliates for traffic; that’s compared with $3.7 billion last year. Operating income before certain costs is expected to be between $1.92 billion and $2.1 billion, up from $1.56 billion in 2005.

Yahoo is considering some big moves in the entertainment space in 2006, including reviving the defunct ABC development project “The Runner” online (Daily Variety, Jan. 16).

Before earnings were announced Tuesday, Yahoo shares were flat at $40.11.

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