Yahoo announced earnings for Q4 2006 today. It was a mixed bag. Lackluster traffic growth of 15% in an otherwise strong environment is a bad sign, and Yahoo also lowered 2007 expectations.
However, net profit was $269M vs $683M for Q4 2005. Sue Decker explained Panama will drag on earnings until second half 2007. Their outlook incorporates expectation of "double digit" growth gains in Revenue per search (RPS).
Financial services were strong during the quarter despite Semel's warning in October that there would be weakness in Financial Services and Autos. Basically Semel had lowered the bar, and jumped over it.
In her CFO mode, Sue Decker constantly refers to "O and O" properties, "O n O" revenue. That means Yahoo "owned and operated" sites. They see that business growing 20%, but once affiliate sites are included, that growth nets down to 14%. That's kinda disappointing, especially since Yahoo's traffic acquisition costs (TAC) is going up (while Google's TAC cost has been going down a lot).
Semel monologued a bit at the end of the conf call Q&A, asking himself:
Q: Why did your re-org the company?
"And according to figures from Nielsen//NetRatings that were released Tuesday, Yahoo's search engine volume in December increased 30 percent from a year ago, a faster growth rate than Google, which posted a 22.6 percent increase."
Sue Decker said comScore's estimates were low a year ago, and have caught up this year. So comScores usage growth numbers look better than Yahoo's internals.
There was a clear focus on affiliates as a problem point on network quality. Obviously this includes all the ad arbitrage sites in the Yahoo Network which have an Overture ad feed. Sue Decker sounds like she's coming after those. We'll see how real that is...
Later in the week, I'll post on my experiences with Panama. It's also a mixed bag.
I find this interpretation quite odd, considering that Yahoo has been pointing to the Panama rollout since Q4 2005, even holding a special analyst day on May 17 2006 to talk about Panama to reporters. Beyond all this, Panama is 2 YEARS LATE!. So it's impressive if Yahoo can spin this rollout as happening earlier than expected.
I thought Sue Decker was pretty clear on this point when she:
At least Henry Blodget noticed the real news of the announcement: Turtle-like revenue growth... Sigh.