Yahoo! 3Q Earnings Thrill Investors, But At What Cost?

Yahoo Inc.’s (YHOO) third-quarter earnings blew analysts’ and investors’ socks off, but at whose expense?

Not CEO Carol Bartz’s, that’s for sure. She’s flying high on a $1 million salary with a possible $2 million bonus (she’s also got $18 million worth of equity and make-up grants in the hopper). Yes, the new company head has worked hard to turn around a long-suffering Internet giant. But is the price tag fair when you consider the hundreds of jobs that were cut to get Yahoo! to the point where it now stands – profitable, as it actually has been for some time, albeit not because of higher sales?

You see, Yahoo! has continued to report net income even as its fortunes declined because it kept slashing jobs. For the third quarter of 2009, it earned $186 million, compared with $54 million in the same period last year. Revenue, however, saw a sharp decline – down 12 percent to $1.58 billion.

Yahoo! forecasts improvements for the fourth quarter.

Still, that’s not gleeful news for the Yahoo!ers now searching for work. But for shareholders, well, looks like Yahoo! is doing its job.