Momentum Deserts Yahoo!

For the quarter ended March 31, Yahoo! made $142 million, or a dime a share, down from the year-ago $160 million, or 11 cents a share. Excluding certain costs, earnings were 17 cents a share.

Net revenue, excluding the money Yahoo! shares with its advertising partners, rose to $1.18 billion from $1.09 billion a year earlier.

Analysts surveyed by Thomson Financial were looking for an 11-cent profit on net revenue of $1.21 billion.

"Our first quarter financial results reflect solid execution against our plan," said finance chief Sue Decker. "We maintained strong profitability and cash flow, while remaining focused on building innovative products and services for our large and growing base of users, advertisers and publishers."

Yahoo! guided essentially in line for the second quarter and year. For the next quarter, Yahoo! said it expected revenue of $1.2 billion to $1.3 billion, against the $1.28 billion Wall Street target. For the year, the company said it expects revenue of $4.95 billion to $5.45 billion, against the Thomson consensus of $5.3 billion.

Yahoo! shares had risen 26% this year going into Tuesday's postclose report, as the company appears to have finally gotten a handle on its much-discussed Project Panama advertising project.

Strong reviews for the Panama ad-ranking system, which debuted in February, had led to increasingly bullish sentiment. And while Yahoo! management has said that it does not expect the financial impact from Panama to be felt until the second half of 2007, investors seemed to be lining up in anticipation.