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Yahoo Falls On Weak 3Q Forecast

By: David Utter

The company's chief financial officer told attendees at a Goldman Sachs conference that sales for automotive and financial advertising has fallen, and that will impact Yahoo's third quarter numbers.

Yahoo Falls On Weak 3Q Forecast"We don't think it's reasonable to assume we're going to gain a lot of share from Google....It's not our goal to be No. 1 in Internet search. We would be very happy to maintain our market share."
Yahoo CFO Susan Decker, January 2006

Search share may be the least of Decker's worries, or CEO Terry Semel's. A year-long decline in the stock price, another delay in rolling out the new advertising system, and now weakness in the multi-billion online advertising market make for some serious concerns in Yahoo's Sunnyvale campus.

Investors were not thrilled to hear the latest bad news from Decker today. MarketWatch reported Decker said those weak auto and financial ad sales will make Yahoo (YHOO) "come in at the bottom half" of its forecasted revenue range.

That would put Yahoo in the $1.11 billion range for revenue. Investors pummeled the already lackluster share price, knocking it down to 25.75 at market close. Analysts cited in the Wall Street Journal generally considered the announcement as a reflection of a cyclical buying cycle and a slowing of the economy in general.

Yahoo's strength has long been its display advertising. The company has been very proficient in bringing strong brand names to its premium online real estate. Economic slowness now is much different than it would be at the end of the calendar year. Another disappointing surprise like today's announcement could spur calls for changes in Yahoo's C-level leadership.


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