Yahoo's Irish subsidiary's pre-tax profits down €15m

THE MAIN Irish subsidiary of internet giant Yahoo last year sustained a 19 per cent drop in pre-tax profits from €76 million to €61 million after restructuring its business here.

According to accounts posted to the Companies’ Office by Overture Search Services (Ireland) (OSSI) Ltd, the company’s turnover decreased by 44 per cent from €807 million to €449 million in the year to the end of December.

Last night its parent, Yahoo Inc, owner of the second most popular US search engine, reported an increase in third-quarter profit after cutting costs by paring jobs and jettisoning businesses.

Net income more than tripled to $186.1 million from $54.3 million a year earlier, Yahoo said in a statement. Sales, excluding fees passed on to partner sites, were $1.13 billion.

Yahoo, facing slumping advertising revenue and mounting competition from Google, has closed websites and refocused on its home page, messaging and mobile services. It also plans to phase out its search engine in favour of Microsoft’s Bing. Chief executive Carol Bartz, who took the reins in January, has resumed spending, including a marketing campaign costing more than $100 million.

Its Irish subsidiary, which supplies online advertising services for customers based in Europe and Asia-Pacific, paid a €150 million dividend to its immediate Yahoo Dutch-based parent during last year.

The accounts show that at the end of the year, the company had accumulated profits of €57 million with overall shareholder funds totalling €63.4 million. Cost of sales dropped from €387 million to €200 million last year, while the company’s distribution costs dropped by 83 per cent from €305 million to €50 million.

However, the directors confirm that in a bid to streamline the corporation’s global business, OSSI ceased to be a shared services operation last year, while it also transferred functions relating to Japan to Yahoo Ireland Services Ltd on August 1st last year.

They also reveal that OSSI ceased trading in April of this year with all of its activities transferred to Yahoo Ireland Services Ltd. Yahoo Ireland Services Ltd has yet to file accounts for last year.

The accounts show that OSSI suffered a 72 per cent drop in turnover in the Asia-Pacific market from €412 million in 2007 to €113.9 million last year as a result of the company restructuring.

Turnover in Europe dropped by 15 per cent from €395 million to €335 million. –(Additional reporting: Bloomberg)