Yahoo Japan Corp, Japan's top Internet portal, said on Wednesday its net profit more than doubled in the latest business year but growth is flat this quarter due to a slowdown in advertising, accounting changes and higher costs.
It expects its advertising and broadband businesses in particular to slow in the April-June first quarter.
Advertisers tend to spend less at the beginning of the financial year, and Yahoo Japan is implementing an accounting change that pushes back the timing of broadband sales.
On top of that, Yahoo Japan said it expects costs to increase by 600-900 million yen ($5.50-8.25 million) as it adds office and data centre space and steps up efforts to protect customer information.
Yahoo BB, Yahoo Japan's high-speed Internet venture with Softbank Corp, said in February that information on 4.52 million customers, or 67 percent of its database, had been leaked to two alleged extortion rings.
The scandal has forced Softbank, Yahoo Japan and other Internet service providers to review their policies for protecting customer data.
Yahoo Japan said it was being conservative with its first-quarter forecasts and hoped to exceed its estimates. It also said it believed the flat growth to be temporary.
But Hideaki Kurimoto, senior portfolio manager for Meiji Dresdner Asset Management, said Yahoo Japan's exponential growth could be ending.
"Every company eventually hits a wall. It seems to me that Yahoo Japan may have already captured most of the business that is out there."
Yahoo Japan, with a market capitalisation of 4.56 trillion yen ($41.82 billion), is the nation's largest media stock with a market value greater than the combined capitalisation of Japan's four biggest broadcasters. Its stock has almost quadrupled in value since the start of the last business year in April 2003.
It runs Japan's largest online auction service and its online advertising business has seen strong demand from corporate clients. Yahoo BB is Japan's largest operator of ADSL high-speed Internet services with about four million subscribers.
For the year ended March 31, its consolidated net profit rose to 24.8 billion yen ($227.7 million) from 12.1 billion yen a year earlier as sales rose 28.2 percent to 75.8 billion yen.
That slightly beat its own forecast of 23.2 to 24 billion yen in earnings and 73.5 to 75.5 billion in sales.
The company said advertising sales jumped 63.6 percent for the year ended March 31 compared with the previous year, largely on the popularity of its sponsored Web links, where companies pay to be listed at the top of search results.
Sales from its online auction business jumped 88.4 percent from a year ago as it took measures to accommodate a greater number of auction items and made a concentrated effort to increase "auction stores" run by businesses.
Operating profit for the online auction unit fell in the fourth quarter for seasonal reasons and due to changes in its fee structure for used cars and a stricter fraud prevention policy.
"We were able to beat our own forecast for the year because advertising sales in March were much stronger than we had expected," Yahoo Japan President Masahiro Inoue told a news conference.
Yahoo Japan said it expected a net profit of 6.85-7.75 billion yen for the April-June quarter, up from 4.54 billion yen a year earlier but flat with the 7.73 billion yen it earned in the fourth quarter. It expects sales for the period of 22.6-24.8 billion yen, compared with 22.6 billion in the fourth quarter.
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