Diwali cheers mkts, Sensex up 505 points

It was cracker of a Diwali at the Bombay Stock Exchange on Tuesday evening when the bourse registered a sharp 547-point rise bringing brought back some enthusiasm among investors after last Friday's bloodbath.

Yahoo to axe 1,500 jobs on weak ad revenue

Yahoo Inc posted a sharply lower quarterly profit on nearly flat sales, but its shares rose 8 per cent on the Internet media company's plan to cut at least 10 per cent of its work force to save costs.

Yahoo, the leading provider of online display advertising, said on Tuesday it planned to cut at least another 10 per cent of its roughly 15,000-strong global work force, and reduce its expense-run rate by around $400 million by the end of 2008.

The planned job cuts of more than 1,500 employees expand an earlier cut of roughly 1,000 jobs, or 7 per cent, that Yahoo made in February. Chief Financial Officer Blake Jorgensen said Yahoo was prepared to further cut jobs and other expenses in 2009 if the economy continues to deteriorate.

Yahoo is cutting its work force in high-cost markets and hiring aggressively in lower-cost locales such as Eastern Europe, India and Southeast Asia.

"The stock is up," Cowen & Co analyst Jim Friedland said. "It's not up on better-than-expected results. It's up on a lack of a complete meltdown in the business," he said.

The Silicon Valley-based Web pioneer said net income for the third quarter tumbled to $54.3 million, or 4 cents per diluted share, from $151 million, or 11 cents per diluted share.

Gross revenue, including payments to affiliated websites that carry Yahoo ads, edged up 1 per cent to $1.79 billion. Net revenue was $1.325 billion, compared with the average Wall Street estimate of $1.37 billion, according to Reuters Estimates.

Wall Street was looking for a profit, on average, of 8 cents per share, according to Reuters Estimates. Net revenue forecasts had ranged from $1.29 billion to $1.43 billion, the same data showed.

Yahoo President Susan Decker said the company struggled as corporate brand advertisers scaled back spending on Web marketing promotions, not only in the United States but also across Europe and Asia. Marketers in the travel and retail industries have been canceling some contracts, she said.

"We are still seeing a weakening trend in some Asian markets," Decker said.

Yahoo co-founder and Chief Executive Jerry Yang put a brave face on the situation, saying that while its premium display advertising business was declining, Yahoo appeared to be gaining market share as buyers consolidated their spending.

"I am encouraged that most advertisers who are still spending in this environment are spending with Yahoo," Yang said.

GLOOMY OUTLOOK, NARROWING OPTIONS

Yahoo forecast fourth-quarter gross revenue at between $1.773 billion...

SAP’s Forecast Goes MIA

By Ashlee Vance

A grim worldwide economy has turned the software maker SAP awfully quiet. The company on Monday tried to erase an earlier fiscal-year revenue forecast from investors’ minds, saying it would no longer release predictions to investors about its current year or 2009 due to widespread “uncertainties.”

The forecast rumblings arrived alongside depressed third-quarter results. SAP witnessed a 5 percent year-over-year drop in net income, to 388 million euros ($486 million) from 408 million euros, including charges related to the acquisition of Business Objects.

Total revenue, including software sales and services, rose 14 percent to 2.76 billion euros from 2.42 billion in the same period last year.

The effect of the earnings announcement was muted since SAP revealed preliminary figures earlier in the month. At the time, it warned that worsening economic conditions were starting to make life difficult in the business software market.

SAP continues to send much the same message.

“The third quarter 2008 was SAP’s 19th consecutive quarter of double-digit growth in software and software-related service revenues at constant currencies,” said Henning Kagermann, the co-chief executive at SAP. “This was an achievement in a period where the global financial crisis had a significant impact on customer decisions towards quarter end.”

Back in July, SAP predicted that software and related services revenue would rise between 24 percent and 27 percent in 2008. As mentioned, however, it will “no longer provide a specific outlook” for sales this year or next.

Word of SAP’s nervousness about the coming months was followed by a number of analyst notes that took a more pessimistic look at the software sector overall.

For example, Citigroup cut its estimates on Oracle to “reflect a recessionary environment and significant foreign currency headwinds.” Its fiscal 2009 earnings per share forecast dropped four cents to $1.48, which would still mark a 14 percent year-over-year increase for Oracle.

Both SAP and Oracle are often used as barometers for spending on business technology.