Overture sales climb, profits fall
Despite posting a substantial rise in second quarter revenue, Overture's net income has fallen by 56 percent from last year.
The company, which is set to acquired by Yahoo! later this year for USD1.63 billion, posted second quarter net income of USD7.6 million or USD0.12 a share, down from USD17.5 million, or USD0.29 a share for the same period last year. Much of the loss was chalked up to acquisition costs relating to the company's recent buys Alta Vista and FAST.
While earnings exceeded the company's earlier forecasts of USD0.04 to USD0.05 per share, investors appeared more excited about the company's USD265.3 million in second quarter revenue, which was up 74 percent from USD152.5 million last year. The Q2 revenue figures also exceeded analysts' expectations of USD246.9 and were well ahead of the firm's earlier forecast of USD255 million
Overture, previously GoTo.com, is the top provider of paid-for, performance-driven search listings -- these are ads that appear alongside search engine results and are linked to the keywords that users search for on top Web sites like MSN, CNN and Yahoo. The company said in its second quarter results that is higher revenues came on the back of a substantial rise in the number of so-called "paid introductions," or the number of times users "clicked" on an Overture-provided ad.
The company also attributed its big sales rise to the increase in the average price advertisers pay for each click. Advertisers in various fields bid for association with certain keywords, and as the medium becomes more popular, the price of certain keywords rises.
Overture's European headquarters in Dublin employs 100 people and the firm intends to increase this to 150 by the end of the year. In Dublin, Overture is orchestrating the roll out of services in new European markets, including Spain, the Netherlands, Austria, Switzerland and Scandinavia. Overture said it is in line to enter these markets as planned by the end of the year.