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Boom in Internet advertising boosts Yahoo's profits

January 19, 2005

Search engine giant Yahoo says a boom in Internet advertising and marketing helped it to more than double fourth-quarter profits.

Excluding profits from the sale of some investments, it made a profit of $187m (143.2m) in the last three months of 2004, up 149% on $75m a year earlier.

Quarterly sales totalled $1.078bn, a 62% rise on 2003. "This was also the year in which we witnessed the beginning of a tipping point in advertising," said chairman and chief executive Terry Semel.

"[The year] in which marketers addressed the continued shift in consumers' changing media habits by investing more of their marketing dollars online."

Yahoo says it is the most-visited internet destination globally. Yahoo and others, such as Google, have been boosted by a flow of advertising revenue from television and other media to the internet.

Advertising-related revenue rose 67% from a year earlier and accounted for 85% of Yahoo's revenue, about the same as the 84% figure for the previous quarter.

Mr Semel said that search-related advertising and brand advertising, such as banner adverts, both grew strongly.

"Yahoo continues to manage the business well," said ThinkEquity analyst John Tinker, noting the breadth of Yahoo's business and its continued international growth.

Yahoo earned $840m in 2004, but that included a windfall from selling stock in Google.

Profits, excluding the sale of Google shares, for 2004 as a whole were $526m, compared to $238m in 2003. Annual sales were $3.575bn, a 120% surge on 2003.

"It looks like very strong organic growth," said American Technology Research analyst Mark Mahaney, who said the company's forecasts came in ahead of expectations.

In trading after the closing bell, Yahoo rose 1.8% to $37.86 on the Inet electronic brokerage system from its $37.18 Nasdaq close.

Yahoo forecasts full-year revenue to be between $3.36bn and $3.56bn.

Source: BBC News

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