Yahoo Japan Rises on Profit Gain, Analyst Ratings

By Akiko Ikeda

July 28 (Bloomberg) -- Yahoo Japan Corp., the operator of Japan's most visited Internet portal, rose to the highest in more than two weeks after profit rose and analysts raised their ratings on the stock.

Yahoo Japan shares gained 1,650 yen, or 4.1 percent, to 41,650 yen, at the 11 a.m. break of morning trade on the Tokyo Stock Exchange, the highest since July 10. The company had the fourth-largest advance on the Nikkei 225 Stock Average.

Net income for the three months ended June 30 rose to 19.2 billion yen ($177 million) from 16.2 billion yen a year earlier on a 16 percent gain in sales, the Tokyo-based company said in a release to the exchange on July 25. It cited increased revenue from advertising and profit from new subsidiary Overture KK.

``The results exemplified a company performing well under adverse conditions,'' KBC Securities analyst Hiroshi Kamide wrote in a report dated July 25. ``The key positive was the Overture search advertising business, which continues to grow, where Yahoo Japan is creating operational gearing.''

Revenue from behavior targeting advertisements, those based on users' track records and which provide advertisements to meet their demands, increased to 28.7 billion yen, a 37 percent gain in its operating margin ratio, according to company spokeswoman Maki Koizumi.

`Relatively Good'

``First-quarter profit reached the level we had expected; relatively good results in the advertisement business,'' Koizumi said by phone today. ``The slowing economy affected recruitment and real estate services. Revenue from the businesses declined as the level of posted information fell.''

Kamide raised his rating to ``buy'' from ``hold'' on July 25. Takayoshi Koike, an analyst at Deutsche Bank AG, lifted his rating on the company to ``hold'' from ``sell'' on the day, while maintaining a 12-month price estimate at 40,000 yen.

The company will retire 2.01 percent of its shares on Aug. 8, Yahoo said in a separate statement. The stock has declined 17 percent this year, compared with a 12 percent drop in the benchmark Topix index.

To contact the reporter on the story: Akiko Ikeda in Tokyo at iakiko@bloomberg.net