Yahoo Earnings -Get a Boost- From the -Microsoft Search Deal

Yahoo CEO Carol Bartz said the company had “a good quarter,” but it takes a little mathematical gymnastics to verify that claim.

Bartz touted display advertising gains of 20 percent from a year ago. However, Yahoo (YHOO) could only say that it stabilized search share amid the transition to Microsoft’s platform.
That transition related to the Microsoft (MSFT) search pact led to a quarter with plenty of moving parts (statement).

Yahoo reported first quarter net income of 22 cents a share on revenue of $1.6 billion, up 1 percent from a year ago. However, Yahoo’s earnings were beefed up by the Microsoft search pact. Microsoft reimbursed Yahoo for the cost of operating its search services and algorithm as well as transition costs. Add it up and Microsoft payments beefed up Yahoo earnings by $78 million, or 5 cents a share. Yahoo also had a 2 cent per share gain related to the sale of Zimbra.
Here’s a look at the Microsoft reimbursement schedule:

Factoring out one-time items, it appears that Yahoo had earnings of 15 cents a share, 6 cents better than Wall Street estimates. Yahoo’s first quarter revenue of $1.6 billion includes $466 million in traffic acquisition costs (TAC) and you get sales of $1.13 billion, a tally that’s a bit shy of the $1.17 billion Wall Street estimate.