EmailYahoo (YHOO $16.32 +0.55) reported third quarter earnings of $0.35 per share, $0.09 better than the Capital IQ consensus of $0.26, while revenues rose 1.6% year/year to $1.09 billion versus the $1.08 bln consensus. Display revenue ex-TAC was $452 million, flat compared to the third quarter of 2011. GAAP display revenue was $506 million, a 1 percent increase compared to $502 million for the third quarter of 2011. Search revenue ex-TAC was $414 million, an 11 percent increase compared to $374 million for the third quarter of 2011. GAAP search revenue was $473 million, a 1 percent increase compared to $467 million for the third quarter of 2011.
Free cash flow was $920 million for the third quarter of 2012, a 273 percent increase compared to $247 million for the same period of 2011. Excluding a payment of $550 million from Alibaba related to a technology and intellectual property license agreement, free cash flow for the third quarter of 2012 was $370 million. Cash, cash equivalents, and investments in marketable debt securities were $9.4 billion at September 30, 2012 compared to $2.5 billion at December 31, 2011, an increase of $6.9 billion. We estimate that we will pay approximately $2.5 billion in taxes related to the Alibaba share repurchase agreement, the majority of which will be paid in the fourth quarter of 2012.
