Earnings Preview: Yahoo revenue woes to end in Q1?

SAN FRANCISCO

Internet company Yahoo Inc. is scheduled to report its first-quarter earnings after the stock market closes Tuesday.

WHAT TO WATCH FOR: Higher revenue for the first time since the third quarter of 2008. At least that's what Yahoo promised three months ago when it forecast its January-March revenue would edge up by 3 percent.

Yahoo needs to deliver on that modest promise to maintain the credibility of CEO Carol Bartz, who was hired at the start of 2009 to end a financial funk that vexed her two predecessors -- Terry Semel and company co-founder Jerry Yang.

While Yahoo's revenue continued to sag last year, Bartz focused on cutting costs and polishing one of the Internet's best-known brands so the company would have a better chance to profit in better times.

Now that the economy appears to be rebounding, investors want to see evidence that Bartz's overhaul is going to pay off.

The online advertising market that generates most of Yahoo's revenue appears to working in the company's favor. Google Inc. last week reported its first-quarter revenue surged 23 percent, largely because Internet advertisers are spending more freely again.

WHY IT MATTERS: Despite its struggles in recent years, Yahoo remains one of the world's most important websites. Its news, sports, finance and entertainment sections are huge drawing cards, as its free e-mail service. The company needs to bring in more revenue to improve and expand its site and develop new products to compete with the likes of Google, Microsoft Corp., AOL Inc. and Facebook.

WHAT'S EXPECTED: Analysts polled by Thomson Reuters expect earnings of 9 cents per share on revenue of $1.17 billion, after subtracting Yahoo's ad commissions.

LAST YEAR'S QUARTER: In the first quarter of 2009, Yahoo earned $117.6 million, or 8 cents per share, on revenue of $1.58 billion.