Yahoo! displays advertising muscle

SAN FRANCISCO - Yahoo! posted quarterly results in line with Wall Street expectations yesterday and showed strength in online display advertising that offset weakness in paid search ads.

Its shares shot up 6 per cent to US$33.24 ($52.55) in after-hours trading.

Yahoo! forecast second-quarter revenue behind some estimates but stood by its target for the full year.

Analysts saw the results as good news for the company's battle with its main rival, Google, which leads in paid search advertising while Yahoo! leads in graphical, or display advertising, such as online banners.

"The display advertising business is holding up strong," said Hoefer & Arnett analyst Martin Pyykkonen. "It is offsetting some of the negative impact of Google having gained some in paid market share."

The world's largest internet media company said net income for the first quarter fell to US$160 million ($252 million), or 11c a share, from US$204.6 million, or 14c a share, a year earlier.

Chief executive and chairman Terry Semel told investors on a conference call that the year was starting off well, and that half of all internet users around the world used a Yahoo! service each month.

- REUTERS