Yahoo might be losing sleep over drop in earnings
We are always talking about Google, as clearly, this is the place where everyone wants a front page listing – but today I wanted to highlight something I read in the news recently about one of the Google rivals – Yahoo (founded by a couple of Young Entrepreneurs!).
Yahoo executives are most likely losing sleep over its 2009 first quarter report, which shows net earnings declined to $117.6 million, a 78% drop compared to the $536.8 million for first quarter 2008.
Gross revenues for the first quarter of 2009 dropped 13% to $1.580 million from the same time last year. Net revenue came in at $1.16 billion, a 15% decline from $1.36 billion in 2008.
Because of the drop in revenue and profit, Yahoo plans to cut its 13,500 workforce by 5%, or 700 workers. You might recall that last year Yahoo laid off 2,400 employees during two separate rounds of cuts in its workforce.
Yahoo, which was hoping to at least break even this quarter, actually saw dismal revenue from its online advertising business. Yahoo experienced a 13% drop in display advertising revenue, a 10% decline in revenue from marketing services of owned and operated websites, and a 3% drop in search advertising.
Granted, things could turn around for Yahoo under its new President and CEO Carol A. Bartz, who was appointed to lead the search engine company in January. During the first three months of this year, it appears that Bartz is trying to right the ship by focusing on Yahoo’s core areas: its search engine, innovative display advertising systems and underpinning technology. So look for Yahoo to start selling those online services, such as HotJobs, that don’t fit into these core areas.
But investors are more focused on the progress of the much talked about advertising partnership with Microsoft, which they see as a way out of their troubles. Bartz, on the other hand, while continuing talks with Microsoft, is intent on positioning Yahoo’s online brand advertising to enhance company growth.
While Yahoo is seeing negative earning results, its main competitor Google reports a 10% net revenue growth for first quarter 2009. Yahoo has been taking a back seat to Google since it came onto the scene. People who “yahooed” in the past quickly turned Google and all its bells and whistles into the leader in search engine providers. Google’s popularity will be tough to overcome, especially since the term “google” is now being commonly used in the English language.
Adding to Yahoo’s internal problems are the poor economic conditions, which could lead to even more layoffs at Yahoo in the near future. Or perhaps we could see an all out sale or acquisition of Yahoo. All in all, these definitely continue to be turmoil times for Yahoo, causing unrest for all who work there.
What is your opinion on Yahoo – could the Google effect completely force the competition out of sight? Or do you see a potential comeback for Yahoo?
Matthew Toren