Yahoo Japan’s 1st-Quarter Earnings Soar

TOKYO — Yahoo Japan Corp., the nation’s largest Internet portal operator, said parent pretax profit more than doubled in the first quarter, thanks to steady growth in online advertising.

The company said earnings rose to 1.95 billion yen ($15.6 million) in the three months ended June 30, compared with 880 million yen a year earlier.

Parent-only revenue surged 84% to 4.87 billion yen from 2.65 billion yen.

The earnings were released after the market closed. Shares of Yahoo Japan fell 4.9% to 3.68 million yen Monday on the Jasdaq stock market.

In the latest quarter, revenue from online advertising operations declined to 3.70 billion yen from 3.88 billion yen in the fourth quarter. It was the first quarterly drop in three years, Yahoo Japan Chief Financial Officer Keisuke Chuman said. The number of clients for its advertising services fell to 842 from 879 the previous quarter.

The company blamed the slowdown in the U.S. information technology sector for the continuing decline in sentiment toward Internet businesses in Japan.

Even so, Yahoo Japan President Masahiro Inoue wasn’t so pessimistic about the outlook for the advertising market. He said the weakness in the business is temporary.
“I think there is still a chance” for further growth in advertising, Mr. Inoue said. He cited the increasing number of Internet users and the company’s monthly hits — the number of times users view its Web site — which rose to 4.96 billion hits in June from 4.47 billion in March.
Mr. Inoue said he hopes the company’s revenue from online advertising recovers “in the July-September quarter or the next quarter.”

Overall revenue in the first quarter rose from the previous quarter after the company started offering asymmetric digital subscriber line Internet access services, creating a new revenue stream.

Yahoo Japan said revenue from its new ADSL Internet service, “Yahoo! BB” reached 748 million yen in the latest quarter.

The company obtains revenue from its ADSL services by selling the necessary equipment for the services, such as modems, as well as by introducing customers to BB Technologies Corp., which was set up to provide infrastructure for high-speed Internet services.
Mr. Inoue said the Internet company had already booked a profit from its Yahoo! BB operations in the quarter, citing the relatively low spending to start such high-speed Internet services.

Mr. Inoue declined to disclose the specific number of applications it had received for the services, saying only that the company received a “moderate” amount.
Yahoo Japan started accepting applications for its ADSL services June 20 through its Web site, and will start the services in August in selected areas.

Together with its ADSL business, the company’s auction and shopping operations also supported overall earnings as the company started to charge for online-auction services in the first quarter, while transactions on its online-shopping service increased.

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