reported late Wednesday afternoon that its earnings soared in the third quarter, exceeding Wall Street's expectations by 5 cents.
For the quarter ended Sept. 30, Yahoo!, the No. 1 Internet portal company, posted pro forma net income of $40.4 million, or 14 cents a diluted share, excluding charges related to its acquisition of
and other items. The consensus of analysts surveyed by
First Call/Thomson Financial
called for earnings of 9 cents a share. Revenue more than doubled, to $155.1 million from $66.3 million a year earlier. For the year-ago quarter, earnings were $6.9 million, or 2 cents a diluted share.
The announcement, which came after the stock market closed, sent Yahoo!'s shares climbing to 183; they had ended regular
trading at 175 3/4, up 2 7/16.
"They really met my rosiest scenario," said Safa Rashtchy, senior research analyst with
U.S. Bancorp Piper Jaffray
, which hasn't underwritten for Yahoo! and has a strong buy rating on the stock. "Users are staying longer and longer, and that's what's drawing the revenues for them."
Analysts pointed to several factors for Yahoo!'s strong performance, ranging from low operating costs and expanding advertising to rising daily page viewership. During September, Yahoo averaged 385 million page views a day, compared with 310 million in June.
Now the question is: How will Wall Street react Thursday morning to another positive announcement from the Santa Clara, Calif.-based company? Yahoo!'s stock has had a recent history of poor performance following quarterly announcements, despite the company's habit of beating analysts' expectations.
But after this quarterly report, Susan Walker White, a
Internet equity research analyst, said she expected that to change. White, who has a buy rating on the stock, foresees the powerful swell of investor approval -- the stock has steadily climbed for the past month -- continuing to push Yahoo!'s stock forward in the fourth quarter. J.P. Morgan hasn't underwritten for Yahoo!.
"This type of margin is phenomenal," she said, adding that Yahoo! might see a dip Thursday but would likely rise throughout the fourth quarter. "People were amazed by the results. In terms of the performance, it was a step above what they've done in the past."
Company officials were delighted with the results. "During the quarter, we achieved record levels in terms of revenues, consumer audience, and advertising and merchant clients," Tim Koogle, chairman and CEO of Yahoo!, said in a statement. "This performance is the result of the broad, global base of users, clients, and partners we have built and the leverage associated with developing a highly integrated media, commerce, and communications platform. The strong brand and expansive worldwide presence we have established positions us to continue our leadership role into the 21st century."