Summary:

Ah, the logic of Wall St: As expected, Yahoo (NSDQ: YHOO) beat expectations. The company reported net revenue of $1.35 billion, slightly ahe…

Ah, the logic of Wall St: As expected, Yahoo (NSDQ: YHOO) beat expectations. The company reported net revenue of $1.35 billion, slightly ahead of analyst estimates of $1.32 billion, and 14 percent higher than $1.18 billion in the year-ago period. Excluding a one-time gain, Yahoo earned $150 million ($.11 per share), slightly below $154 million in the year-ago period. EPS exceeded analyst estimates of $.09 per share. Some highlights:

Not mentioned: any data about the Google (NSDQ: GOOG) trial (it will be asked about on the call).
Cost of Microsoft: “Operating income for the first quarter of 2008 includes incremental costs of $14 million incurred for outside advisors related to Microsoft’s (NSDQ: MSFT) unsolicited proposal, other strategic alternatives, and related litigation defense costs.”
International: Revenues were actually down 11 percent to $510 million from $571 million.
FCF: Free cash flow of $646.5 compared to $368.7 in the year-ago period.
Alibaba: Yahoo booked $401 million from an IPO-related gain in Alibaba. Note that this wasn’t part of the net income listed above.
AT&T: As part of the company’s relationship with AT&T, Yahoo received a one-time payment of $350 million from the operator. This too was not included in the earnings figure.
Severance Total severance costs were $29 million in the quarter.
Outlook: For Q2 gross revenue is expected to be between $1.73 and $1.93 billion. For the long term, Yahoo is sticking with the same multi-year outlook as it set out back in March, that its operating cash flow would double by 2010.

Bottom line: They didn’t miss, so they’re still in the game. But if Microsoft had never made its bid, this report alone wouldn’t get Yahoo shares to where they are today. Beyond that, the assumption is that Yang & Co. pulled out all the stops or pulled its ‘levers’ to make the number this quarter. So the fact that the revenue beat was only about $30 million is not that exciting. The real losers: anyone craving a decisive narrative or a swift conclusion. Meanwhile, shares actually edged down after hours — even after the call — so at this point, the market isn’t taking a higher bid from Microsoft for granted. There’s also no new movement on any other outcomes, such as a possible deal with AOL.

Release | Webcast 5:00 PM ET | Slides (.pdf)

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