Internet giant Yahoo posted a 37% slump in third-quarter profits last night and announced it would buy back up to $3 billion worth of its stock.
The company said 'unanticipated challenges' including stock-option expensing led to third-quarter net income of $159m, or 11 cents a share, compared with $254m the same time last year.
'While we are tremendously excited about many things happening at Yahoo, we are not satisfied with our third-quarter financial performance,' CEO Terry Semel said in a statement.
Excluding payments to search-advertising partners, Yahoo's net revenue rose 20% from a year earlier to $1.12 billion. Analysts had expected the 11 cent per share profit, but on higher net revenue of $1.14 billion.
Yahoo also disappointed analysts by forecasting fourth-quarter revenue in a range of $1.15 to $1.27 billion, underperforming Wall Street investor targets of $1.31 billion.
The company also said that it planned to repurchase up to $3 billion worth of its outstanding common stock over the next five years, depending on factors including market conditions and the share price.
Semel announced last night that Yahoo's new Project Panama platform for advertisers went live yesterday and 'marked a significant turning point' in targeting advertising and would 'unlock the potential' of its huge base of users. The phasing-in of the Panama platform worldwide was expected to be completed early next year.
Semel vowed that Yahoo would be 'laser-focused on closing the gap in monetizing services, widening the lead in graphical advertising, and seizing the lead in social media and mobile search'.
'We believe now is the time to make investments in new audiences,' Semel said. 'Clearly some new players have emerged in these areas that have attracted a lot of attention, but Yahoo has been a pioneer in social media.'
Yahoo bought Jumpcut online video editing website in September and this week announced a deal to channel CBS television news programmes to its portal.
'Our goal is to make video as ubiquitous as text on Yahoo,' Semel said. 'We are moving quickly to forge partnerships with video producers.'
Yesterday, Yahoo also announced that it had bought video advertising specialty firm AdInterax and purchased a 20% stake in Right Media advertising exchange.
