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Business – Yahoo begins ‘journey back to respect’: CEO

SAN FRANCISCO: Yahoo Inc vowed to triple its operating profit margin in the next three years as the Internet company seeks to reignite its growth
and regain investor confidence.

During a presentation to analysts on Wednesday, executives said the company has fixed various shortcomings that have plagued the company in the past and touted its large online audience and ties to advertisers as keys to its comeback.

Yahoo also announced in a separate filing with the Securities and Exchange Commission on Wednesday that the deadline to finalize a search agreement with Microsoft Corp has been extended. The deadline had been midnight, Tuesday. Yahoo did not set a new deadline in the filing.

“This is just to make sure the definitive agreement has all the complexity in there that is needed to do a 10-year deal,” Bartz said at the event about the extension. “We don’t think this does anything with the filing regulation deadlines,” she said.

A string of Yahoo sales, engineering and product executives took the stage on Wednesday in Yahoo’s first full-day briefing with analysts since May 2006. Finance Chief Tim Morse said the company expected to achieve operating margins between 15 per cent and 20 per cent by 2012.

Executives said Yahoo would achieve the new margin targets by accelerating its revenue in the next few years, though they declined to provide a specific revenue growth rate. In its most recently ended quarter, Yahoo’s revenue decreased 12 per cent year-over-year and was roughly flat quarter-over-quarter at $1.57 billion.

Yahoo delivered an operating margin of roughly 6 per cent in the third quarter, which Bartz described as “pathetic” earlier on Wednesday.

“Today is the beginning of a journey back to respect,” Bartz said. “Along the way, here we are, a 14-year-old Internet company that somehow got boring,” she said later. Since Bartz took over as CEO in January, the company cut 5 per cent of its staff and has shed several businesses.

In July, Yahoo announced a 10-year deal to let Microsoft Corp provide search technology, a partnership designed to save costs and mount a more effective challenge to Google Inc, the world’s No 1 search engine.

Yahoo has said it expects the deal to close sometime in 2010. Yahoo executives stressed that the company remains focused on Internet search as a crucial product for Yahoo users and for Yahoo advertisers. Executives said the company was taking a variety of steps, including improving the relevance of the search ads it displays alongside search results, that will boost the revenue that it generates per search ad.

The company reiterated the importance of search data to help it target display ads to websurfers. With competition on the Web increasingly coming from social media sites like Facebook and Twitter, Yahoo executives said its mixture of online news, entertainment and sports content as well as its communications products like Web-based email and instant messaging will keep the company relevant.

Yahoo executives said the company would invest in editorial staff to produce more original features and tweak its online products to keep users on the site longer and boost advertising revenue. Since Yahoo revamped its homepage in July, page views have increased 9 per cent while time spent on the site has increased 20 per cent, according to Tapan Bhat, senior vice president for integrated consumer experience.

Click-throughs on the main ad on the front page have increased 10 per cent, he said. Shares of Yahoo closed Wednesday’s regular session on Nasdaq down 65 cents at $16.04, and were down a further 8 cents in after-hours trade.

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October 29, 2009 - Posted by | Uncategorized |

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