Profits Fall At Yahoo, But Don’t Blame Search

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Jerry Yang’s return as Yahoo CEO experienced a less than auspicious start to his first time back at the helm for an earnings announcement, as the numbers showed a dip in display ad performance.

Profits Fall At Yahoo, But Don't Blame Search
Profits Fall At Yahoo, But Don’t Blame Search

Yahoo executives have warned previously that the Panama search advertising system would not have an immediate impact on the bottom line. It didn’t do anything to balance out a lower performance from display advertising, once a dominant force for the company.

Gross revenue rose by 8 percent to $1.70 billion, but net income ticked downward to $161 million. Disappointed shareholders have dropped the stock to $26.52 in after-hours trading, after a market close of $27.53.

The rest of 2007 won’t be very promising for Yahoo investors. The company lowered its third quarter and full year guidance to reflect the drop in display ads and the extra time needed for Panama to mature within the search advertising market.

We were contacted by a Yahoo spokesperson ahead of the bell, regarding the recent search rankings from comScore and our observation that Microsoft’s gain in US search market share equaled the collective share given up by Yahoo, Google, and AOL for June 2007.

Instead of attributing Microsoft’s gain to Yahoo’s loss, we were told the market has expanded and Microsoft simply picked up share from that growth. We’ve asked for supporting documentation to make a better determination of this, but haven’t received it as of press time.

Profits Fall At Yahoo, But Don’t Blame Search
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