Earnings: Yahoo | Sun Microsystems | AMD | Johnson & Johnson

SAN FRANCISCO - (AP) - Yahoo Inc. (YHOO)'s fourth-quarter profit topped analyst expectations to end a recent streak of financial letdowns at the Internet bellwether.

The Sunnyvale-based company said Tuesday that it earned $268.7 million, or 19 cents per share, during the final three months of 2006, traditionally the peak season for Web sites like Yahoo that depend on advertising for most of their revenue.

The profit declined 61 percent from net income of $683.2 million, or 46 cents per share, at the same time in 2005, but the two quarters didn't provide an apples-to-apples comparison. That's because a one-time gain of $310 million boosted the 2005 results while the 2006 figures included stock option expenses that weren't recorded on Yahoo's books in the previous year.

If not for certain tax benefits, Yahoo said it would have earned 16 cents per share, exceeding the average analyst estimate by 3 cents per share, according to Thomson Financial.

Yahoo's revenue for the period totaled $1.7 billion, a 13 percent increase from $1.5 billion in the prior year.

In a measure far more important to investors, Yahoo's revenue fell to $1.23 billion after subtracting advertising commission that the company paid to its partners. That figure represented a 15 percent increase from the prior year and a 10 percent improvement from 2006's third quarter.

The sequential growth rate carries more weight on Wall Street and help explains why Yahoo's stock price plunged by 35 percent last year while the shares of rival Google Inc. continued to climb.

Google's quarter-to-quarter revenue, minus ad commissions, has been accelerating at a far faster pace than Yahoo's, and the gap appears to be widening. Analysts believe Google will show sequential revenue growth of 17 percent when it releases its fourth-quarter results next week.

Yahoo shares fell 46 cents to close at $26.96 on the Nasdaq Stock Market before the fourth-quarter earnings were announced, then recovered 23 cents in extended trading.

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Sun Microsystems Back To Profitability

SAN FRANCISCO - (AP) - Sun Microsystems Inc. (SUNW) returned to solid profitability Tuesday after years of red ink, easily exceeding Wall Street's tepid expectations thanks to the growing popularity of its corporate computers and its newest operating system for servers.

For the three months ended Dec. 31, the server and software maker earned $126 million, or 3 cents per share, up from a net loss of $223 million, or 7 cents per share, in the year-ago period.

Fiscal first-quarter revenue totaled $3.57 billion, up 7 percent from $3.34 billion in the year-ago period.

Excluding special expenses, including $58 million in stock-based compensation charges and $26 million in restructuring costs, Sun earned $148 million, or 4 cents per share.

On that basis, which does not comply with generally accepted accounting principles, analysts surveyed by Thomson Financial expected the company to earn $26.4 million, or 1 cent per share, on sales of $3.52 billion.

The earnings report ends years of losses for Santa Clara-based Sun — one of the highest-flying companies during the 1990s Internet boom. It bled more than $5 billion since 2002, when computer-related spending dried up and lower-cost offerings from competitors encroached on Sun's turf.

Sun shares gained 43 cents in after-hours trading. Before the report came out, Sun shares dropped 9 cents, or nearly 2 percent, to close Tuesday on the Nasdaq Stock Market.

"Sun's financial performance this quarter demonstrates that our strategy and discipline are paying off," said Jonathan Schwartz, Sun's chief executive.

On Monday, Sun announced it would begin building and shipping later this year servers and workstations that run on processors by Intel Corp. In return, Intel officially endorsed Sun's Solaris operating system. The partnership could help boost Sun's flagging market share.

Sun is known for catering to corporate clients willing to spend liberally on cutting-edge technology — not customers looking for the cheapest possible computer servers and bare-bones consulting services. That strategy proved lucrative when companies are eager to spend cash — but once the economy sours, expensive computer servers and the most advanced technology are often seen as discretionary, even profligate.

To correct that reputation, Sun went public last week with an ambitious initiative to get startups to buy Sun's Solaris operating system instead of Linux — widely considered the low-cost choice for penny-pinching startups. The campaign is aimed in particular at entrepreneurs and computer programmers in developing countries.

AMD Falls To Loss On Pressure From Intel

SAN JOSE, Calif. - Advanced Micro Devices Inc. (AMD), the world's No. 2 microprocessor maker behind Intel Corp., said Tuesday that it swung to a loss in the fourth quarter as the company incurred heavy costs related to its acquisition of graphics chip maker ATI Technologies Inc., negating record processor sales.

A brutal price war and Intel's increasingly competitive processors also weighed on AMD's earnings, as the company said overall shipments of its high-margin server chips were essentially flat compared with the third quarter and that selling prices for those chips were down significantly.

However, AMD's overall microprocessor shipments rose 26 percent over last year; the company said it set a new record, although it did not immediately say what the old record was. The company said it experienced especially strong growth in shipments of laptop chips.

For the quarter ended Dec. 31, the Sunnyvale-based company posted a net loss of $574 million, or $1.08 per share. For the same quarter last year, AMD earned $96 million, or 21 cents per share.

AMD said after the markets closed that the fourth-quarter figures include $550 million, or $1.04 per share, in acquisition-related charges and $27 million, or 5 cents per share, in stock-based compensation expense.

Revenue for the quarter was $1.77 billion, compared with $1.84 billion at the same time last year.

Analysts were expecting the company to earn, on average, 10 cents per share on $1.74 billion in revenue for the quarter, according to a survey by Thomson Financial.

"We believe we once again gained microprocessor unit share in the quarter, as we did in the year, by continuing to execute against our customer acquisition strategy and our product, technology and manufacturing plans," Robert J. Rivet, AMD's chief financial officer, said in a statement.

The company said it expects revenue in the range of $1.6 billion to $1.7 billion in the first quarter.

Before the report was released, AMD shares dropped 2 cents to close Tuesday at $17.51 on the New York Stock Exchange. The shares fell another penny in after-hours trading.

Johnson & Johnson Profit Ticks Higher

NEW YORK (Reuters) - Johnson & Johnson (JNJ) said on Tuesday its quarterly profit rose, helped by growing sales of its drugs and consumer products, although stent sales fell sharply.

The diversified health-care company earned $2.17 billion, or 74 cents per share in the fourth quarter, compared with $2.1 billion, or 70 cents, a year earlier.

The results included $217 million in charges related to the company's $16.6 billion acquisition in December of Pfizer Inc's consumer health products, including such brands as Listerine mouthwash and the Sudafed allergy drug. Sales of the former Pfizer (PFE) products were not included in J&J's fourth-quarter results.

Excluding items, J&J earned 81 cents per share. Analysts on average expected a profit of 79 cents per share, according to Reuters Estimates.

Sales rose 8.5 percent to $13.7 billion, matching the Reuters Estimates forecast.

Consumer product revenues — including the New Brunswick, New Jersey-based company's Aveeno skin products and sun care products acquired from another acquisition, jumped 11.2 percent in the quarter to $2.57 billion.

Global pharmaceutical sales rose 8.5 percent to $5.95 billion, helped by strong demand for schizophrenia drug Risperdal and epilepsy treatment Topamax.

Global Risperdal sales rose 18 percent to $1.06 billion, despite strong competition with Bristol-Myers Squibb Co.'s (BMY) newer Abilify. Sales of Topamax jumped 28 percent to $529 million.

Sales of arthritis drug Remicade grew 13 percent to $780 million, while those of attention deficit disorder treatment Concerta rose 24 percent to $257 million.

But combined sales of anemia drugs Procrit and Eprex slipped 1 percent to $788 million, hurt by longer-acting rival Aranesp sold by Amgen Inc. .

Sales of medical devices and diagnostics rose 7.2 percent to $5.17 billion, although global sales of the company's drug-coated Cypher stent fell 15 percent to $580 million.

U.S. sales of Cypher, used to prop open cornary arteries that have been cleared of plaque, fell 18 percent to $280 million, with sales hurt by overall softness in demand for the devices.

Sales of drug-coated stents have been hurt by reports showing they can cause blood clots.

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