Yahoo profits down but shares pick up as figures beat estimates

AppId is over the quota
AppId is over the quota
Yahoo's figures were not as bad as investors had feared. Photograph: Justin Sullivan/Getty Images

Troubled internet giant Yahoo announced a 26% fall in earnings on Tuesday as it published its first results since firing chief executive Carol Bartz.

The company announced that earnings had dropped to $1.07bn, from $1.12bn a year ago, but the figure was not as bad as investors had feared and the firm's shares rose in after-hours trading.

Yahoo posted a profit of $293.3m, or 23¢ a share, down from $396.1m, or 29¢ a share, a year earlier. Analysts surveyed by Thomson Reuters had predicted a per-share earnings of 17¢.

The company is still one of the biggest draws on the internet. Yahoo said it expects revenue of $1.13bn to $1.24bn in the next three months, excluding traffic-acquisition costs.

Bartz was ousted in September after her plans to turn the company around failed to take off. The company has failed to keep pace with advertising growth at rivals Google and Facebook. The outgoing chief emailed staff telling them of her dismissal, and later told Fortune magazine Yahoo had "fucked me over".

After Bartz's dismissal, the firm announced a strategic review. Bankers have been appointed to sound out potential buyers.

Among those who have declared an interest or are reported to be looking Yahoo over are Microsoft, which launched a $44.6bn hostile bid for Yahoo in 2008. Yahoo, which is now valued at $20bn, is also being targeted by Jack Ma, chief executive of Chinese internet company Alibaba, which is 40% owned by Yahoo.

Interim chief executive Tim Morse said he would not comment on the state of the strategic review. "The board is actively looking at the full range of options available to return the company to a path of robust growth and industry-leading innovation," Morse said in a conference call. "The board also has said that when it has something to announce, it will do so.

"That will take time. It will not be today, and not on this call."

Yahoo continues to lose visitors to its rivals. According to market analyst ComScore, Yahoo accounted for 9.9% of the time spent by US web surfers online in September, while Google had 10.2% and Facebook had 14.7%.

Yahoo reported that its display ads business was flat at $449m compared to a year ago. Yahoo's share of display ads – a key indicator of the company's health for analysts – is set to decline this year, according to Emarketer. Emarketer is predicting Yahoo's share of banner ads will be 13.1% this year in the US, down from 14.4% last year. Facebook's share will climb to 16.3%, up from 12.2%. And Google should have 9.3%, an increase from 8.6%.

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Outbound Google boss Eric Schmidt sells shares

Eric Schmidt stepping as chief executive of Google but becomes Executive Chairman photograph: Graham Turner for guardian

Outbound Google boss Eric Schmidt said, he is preparing to sell shares in the search engine worth more than $ 326 m £ 200 m on the day after he raised from the top job.

The sale comes after the company announced that Google co-founder Larry Page would replace Schmidt as chief executive in April, take over the day-to-day running of the company. Schmidt becomes Executive Chairman. Share sale would be his first in more than three years.

Plan stock-trading, filed with the u.s. financial regulator the Securities and Exchange Commission, States that Schmidt plans to sell as much as 534,000 class a shares in the course of the year. Google's shares were worth $ 611.75 yesterday, making sales worth $ 326. 67 m to today's prices.

Sales represent only a fraction of Schmidt's Google fortune. His 10 years at the company has 55-year-old built a holding of 9.2 m Google shares worth $ 5.8bn.

The surprise announcement that Schmidt leaving chief executive job shocked Wall Street and Silicon Valley. He has worked closely with page and co-founder Sergey Brin for a decade to take the company public and build it into one of the most effective and successful companies in the world.

He intensified after tweeting that it no longer required "adult supervision". On a conference call with analysts Schmidt said: "I think Larry is ready. His ideas are very interesting and clever, and it is time for him to have shot at running this. "Last year Google was eclipsed by Facebook as the most visited site on the planet and Google have suffered setbacks in social media. Analysts believe the move may signal the company attempts to regain lead in innovation.

Colin Gillis, an analyst with BGC financial, wrote in a note to investors: "while Google has grown under Eric Schmidt's tenure as CEO, a case can also be made that it was not built any new material revenue streams, was intended for the construction of late mobile market has no effective social solutions, overbuilt its Headcount is placed and the Government regulators cross hairs."

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