WebProNews

Yahoo! released its fourth quarter financial results today, showing that though the Internet media giant had a healthy surge in net profit for the period, the company's overall performance fell slightly short of Wall Street analysts expectations.

Expected to post fourth quarter earnings at 17 cents per share, Yahoo! missed that estimate, pulling in only 13 cents per share. Shares of Yahoo! immediately fell 11 percent on Wall Street, dropping from $40.11 to $35.49.

Yahoo! chief financial officer, Susan Decker said 2006 will bring an increased focused on enhancing advertising products, and that 2005 resulted in "significant free cash flow."

Free cash flow was $330 million in the fourth quarter of 2005 compared to $251 million for the same period of 2004. In addition to free cash flow, Yahoo! generated $369 million from the issuance of common stock as a result of the exercise of employee stock options, and a net $141 million from structured stock repurchase transactions.

These increases were offset by $1,571 million used for acquisitions and $14 million used for direct stock repurchases. Cash, cash equivalents and investments in marketable debt securities were $4,000 million at December 31, 2005 as compared to $4,764 million at September 30, 2005, a reduction of $764 million.

Overall, the company is still bringing in substantial revenues. Revenues were $1,501 million for the fourth quarter of 2005, a 39 percent increase compared to $1,078 million for the same period of 2004. Excluding traffic acquisition costs ("TAC") were $1,068 million for the fourth quarter of 2005, a 36 percent increase compared to $785 million for the same period of 2004.

Net income for the fourth quarter of 2005 was $683 million or $0.46 per diluted share compared to $373 million or $0.25 per diluted share for the same period of 2004. Adjusted net income for the fourth quarter of 2005 was $247 million or $0.16 per diluted share compared to $187 million or $0.13 per diluted share for the same period of 2004