Yahoo notches Wall Street win; Aims to be Internet 'starting point'

Updated throughout: Yahoo's third quarter results are showing signs of life as the company notched a rare win with Wall Street.

For the third quarter ended Sept. 30, Yahoo reported earnings of $151 million, or 11 cents a share, on revenue excluding traffic acquisition costs of $1.28 billion. Earnings in the quarter were flat with the same quarter a year ago and sales were up 14 percent.

Wall Street was expecting third quarter earnings of 8 cents a share on revenue of $1.24 billion, according to Thomson Financial.

As for the fourth quarter outlook, Yahoo projected revenue of $1.31 billion to $1.45 billion with operating income of $480 million to $550 million. For the year Yahoo sees revenue of $5 billion to $5.16 billion with operating income of $1.88 billion to $1.95 billion. Those projections were in line with Wall Street estimates.

Yahoo didn't outline its strategy in detail in itsstatement, but did provide color on the company's conference call. It's easy enough to connect the dots though and much of the call trumpeted previous moves such as buying Blue Lithium.

CEO Jerry Yang said the company's goals are to be the starting point for consumers on the Internet, be a must buy for advertisers and attract developers with open platforms. He also outlined those points in a blog post (also see Techmeme). President Sue Decker also outlined those comments in a statement and later comments. The big takeaway: Yahoo is devoting a good bit of attention to building a platform that will attract developers.

On a conference call with analysts, Yang said Yahoo has created a framework for decisions and market opportunities. The goal: Delight the audience. The mission: Integrate Yahoo's properties. The challenge: Becoming more relevant to its audience.

"I think there's a lot of improvement to driving relevance for our audience," said Yang.

By point:

Being an Internet starting point: Yang argued that an Internet starting point has to be broad. Yahoo's entry points are the home page, My Yahoo and Mail. "With respect to consumer offerings we will prioritize our spending on improving our starting points," said Yahoo. For instance, Yahoo Finance and Yahoo Sports are starting points so they will get resources. Yahoo has shut down subscription music and will integrate Yahoo 360 with existing properties.

Speaking of social networking Yang was asked about Yahoo's strategy. "I think we are much more focused around a broad set of things to start their experience on Yahoo (such as home page content, search and mail). Connecting people with people they care about is important, but only in how it fits in with our starting point strategy," said Yang. Become a must ad buy: Yang spoke of creating a link between display and search advertising. Yahoo has already made many of these moves.

Decker said that non guaranteed ad pricing has accelerated to close the gap with guaranteed placement. Yahoo's mission is to use its ad networks to make splintered buys easier to manage.

Attracting developers: "In the past, we have made it difficult for developers to access our applications and platform," said Yang. "We're looking at many different ways to be more open. This includes opening up our home pages to third parties and building services for third parties." The goal is to create "a rich developer community."

Yahoo has talked about this effort before, but what's different this time is that Yang seems to understand the challenges. He noted that Yahoo will have to transition its platform to be more open. To do that, Yahoo will need some IT legwork behind the scenes. If I were to hazard a guess the IT sounds siloed by product.

Yahoo CFO Blake Jorgensen noted Yahoo was "pleased" with its results and encouraged "by the early signs of improvement in our business."

Separately, Yahoo inked a multiyear search and advertising deal with WebMD and signed publishing agreements with Cars.com, Forbes.com and Ziff Davis Media.