Yahoo! Posts Better-Than-Expected Earnings

The portal company reported third-quarter earnings of 14 cents a share, topping analyst estimates and the so-called whisper number.
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The Federal Reserve, Wal-Mart (WMT) - Get Report and now Yahoo! (YHOO) are all out of the way after giving the Internet sector little presents this week.

Yahoo! just reported third-quarter earnings of 14 cents a share, which topped the 26-analyst

First Call

consensus earnings estimate of 9 cents, the whisper number of 12 cents and the year-ago 2 cents. Revenue of $155 million compared to $66.3 million a year ago. Ahead of its report, Yahoo! closed up 2 7/16, or 1%, at 175 3/4, recovering from a low of 171 9/16.

Whether Yahoo!'s earnings will be strong enough to start a rally in either its shares or in the Net sector as a whole is unclear. Traders have made a habit of buying ahead of the company's earnings and selling either just before or just after they're released. And while Yahoo!'s postearnings woes have at times also dragged down the Internet sector, today's rally suggests that the sector will do just fine on its own.

TSC's

James Cramer

takes a look at Yahoo! and the performance of the Internet sector in a

piece earlier today.

Internet stocks did rally with a vengeance one day after the Fed decided not to raise rates. And certainly helping was news that Wal-Mart would not have its revamped Web site up and running in time for the holiday season. Online retailers rallied on the news, even though Wal-Mart did say that its current site would have an increased selection of toys, electronics, books and holiday items.

TheStreet.com Internet Sector

index closed up 40.72, or 6.1%, at 708.74, topping the 700 level for the first time since April 27.

Online retailers enjoyed a strong day.

TheStreet.com E-Commerce

index closed up 6.79, or 7%, at 103.60. Among those benefiting from the Wal-Mart announcement were

Amazon.com

(AMZN) - Get Report

, which closed up 4, or 5%, at 82 7/16;

eToys

(ETYS)

, which finished up 10 3/8, or 15%, at 79;

eBay

(EBAY) - Get Report

, which ended up 10 1/2, or 7%, at 151 11/16; and

uBid

(UBID)

, which settled up 3 3/4, or 13%, at 32 5/8.

Other market standouts included

Lycos

(LCOS)

, which closed up 7 5/8, or 14%, at 64 1/8. There have been

rumors that

CMGI

(CMGI)

may be looking to either sell its minority stake in Lycos or buy the remainder of the company it does not hold.

Also,

Phone.com

(PHCM)

closed up 18 1/8, or 12%, at 174 as wild price swings in the stock continued.