Yahoo CFO Morse: Business Has ‘Stabilized’

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In its earnings report, Yahoo (NSDQ: YHOO) emphasized that the company’s businesses had “stabilized” — and that word was repeated by CFO Tim Morse throughout the company’s earnings call. Morse made a point of comparing the company’s performance to the second quarter, saying that Yahoo had seen “strength in key areas of our business after two straight quarters of de-acceleration.” (CEO Carol Bartz was not on the call; Morse said she had “come down with something” which he described as not being serious).

Some highlights:

Microsoft (NSDQ: MSFT) search partnership: Morse said the company still believes the deal can be closed in the early part of 2010. If the deal does in fact get the green light by then, he said there would “significant progress in (transitioning) one or two major markets” to Microsoft’s search ad platform next year.

Hiring: Yahoo hired 200 employees during the quarter, which Morse said was not as many as the company had planned to add — something he attributed to “taking time to hire the right people in the right places.” Most of the new employees were on the product side. “We want to make sure we’re every bit the technology company we know we are,” he said.

Stake sales and divestitures: Morse said flat out that Yahoo had no plans to sell its stakes in Yahoo Japan or Alibaba Group. But he would not comment on the company’s shopping of several of its properties. “It will continue to not make sense to talk about stuff like that publicly,” he said.

Branding campaign: So far, Yahoo has spent $18 million on its big ad campaign. Asked whether it had been successful in bringing new users to Yahoo, Morse said it was too early to say. “(There’s) some very encouraging input, but I’m going to leave it to people who really know what they’re doing with that,” he said.

Display: Morse called out the performance of display ad sales to the consumer products, entertainment and finance segments. He said Yahoo was seeing signs that “spending was loosening up a bit.” By reducing the number of ads on some of its properties, Morse said the company had taken a $15 million sales cut.

Search: Asked to compare the performance of Yahoo’s search business to Google’s — which posted an 8.4 percent increase in revenue during the quarter — Morse dismissed the question: “It’s tough to compare to Google (NSDQ: GOOG). I got to focus on Yahoo and what’s going on with us.” He said that queries overall were up — and pointed out that quarter to quarter the performance of the company’s search business had been roughly flat. Later during the call, however, he acknowledged that Yahoo’s monetization rates reached their peak a year ago.

Page views: Page view growth across Yahoo properties slowed during the quarter. Total page views were up only five percent. Morse attributed the slowdown to “tough comparisons” noting that Yahoo had cut several properties during the quarter, including its Yahoo 360 social networking site.

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