Yahoo profits soar, but miss expectations

Yahoo Inc.’s fourth-quarter profit nearly doubled as advertisers continued to shift spending to the Internet, but it wasn’t enough to live up to the lofty expectations for the Web’s most heavily trafficked destination.

Yahoo’s shares plunged by nearly 13 percent after the report’s release Tuesday.

The Sunnyvale-based company said it earned $683.2 million, or 46 cents per share, during the three months ended in December. That represented an 83 percent increase from net income of $372.5 million, or 25 cents per share, at the same time in 2004.

The 2005 results included a $310 million gain triggered by a complex deal that left Yahoo with a 40 percent stake in Alibaba.com, China’s largest e-commerce company.

“A surge in consumer bankruptcies and a flattening yield curve took a bite out of fourth quarter earnings at some of the nation’s largest banks, and some stepped up provisions for future loan losses. Several banks — including Wells Fargo & Co. — missed analysts’ profit expectations.

Tuesday’s earnings reports, the first in a week heavy with results from financial institutions, underscored how the yield curve has continued to hurt the nation’s banks and thrifts. A flattening yield curve — the result of rising short-term rates and comparatively low long-term rates — squeezes financial institutions’ net interest margin, which is the difference between what banks pay to borrow money and what they can earn when they lend it.

Wells Fargo & Co., the nation’s fifth largest bank by assets, said its profit rose 8 percent in the October-December period despite reduced demand for home mortgages and greater bankruptcy charge-offs.

The San Francisco-based company earned $1.93 billion, or $1.14 per share, in the quarter compared with $1.78 billion, or $1.04 per share, a year earlier. The results were a penny a share below the estimate of analysts polled by Thomson Financial.

“Intel Corp.’s fourth-quarter profit and sales rose but missed Wall Street expectations Tuesday as the world’s largest chip maker faced difficulties in meeting demand for some products and lower-than-expected average selling prices.

The company also scaled back revenue expectations for the first quarter, saying it expects sales to be between $9.1 billion and $9.7 billion. Analysts were expecting it to report sales of $10.05 billion for the period.

“A new line of mainframe computers and positive trends in the chip business boosted fourth-quarter results at International Business Machines Corp., where net profits rose 13 percent and beat Wall Street expectations Tuesday.

The report also provided a crucial update on the health of IBM’s services business, which accounts for more than half of Big Blue’s revenue. IBM saw a shortfall in long-term services contracts signed in the fourth quarter, though it was not as severe as some analysts had feared.

In the last three months of 2005, IBM earned $3.19 billion, or $1.99 per share.