Not good news, a warning on ads, and a serious drop in the stock to boot. From the Journal email alert (on the public home page):
Yahoo shares plunged more than 10% after Chief Executive Terry Semel warned that online advertising growth appears to be slowing in some categories. Mr. Semel, speaking at an analysts’ conference, said the company has seen growth weaken in ads from automotive and financial services companies, and said it’s too early to tell if the slowdown will spill over into other areas.
Update: Safa at Piper says this is “a buying opportunity.” I uploaded his report here.
7 thoughts on “Meanwhile, Over at Yahoo…”
Well, I guess this was bound to happen eventually. It’s just the laws of economics playing out. Although huge, there is a finite market for online advertising. In addition, the barrier to entry is surmountable and the payoff for sucess lucrative. First there was Overture and AdSense; now there are many players in this space such as Quigo.
I think we tend to become enamored with some celebrity companies and believe that they hold and endless pot of money with little threat of competition. I’m really interested to see the official and unofficial causality analysis for this decline.
BTW. Here is a fairly interesting article about how Quigo is winning business away from Google and Yahoo:
Maybe it should have been the automotive and financial services stocks that got hit.
You bring up a good point, Mickeleh. It could be that the online advertising market is healthy as a system, but the automotive and financial markets are low on marketing cash. Nonetheless, that still means less business across the board.
the quality of yhoo finance has been sliding big time and this is the reason that they are getting smacked there. yhoo went and made changes to what was once the best way to get a ton of basic corporate and market financial information for free. they screwed it up themselves by trying to fix what wasnt broken. the messege boards alone must have been a gold mine and the new format is literally unusable. no bueno chach…
Probably more aof a factor is the slowing of revenues from YSM, formerly Overture. Content and Precision match bid prices have slid across a lot of markets. For a long time YSM bids were generally higher than AdWords; this has now evened out as more customers use services of Search agencies that are using PPC optimisation software. So it is a more perfect marketplace than before. Add to this the rising market share of Google over the last couple of years, the loss of revenue from MSN… not a surprise
Good find! Lots of comp going on out there. ASK & MSN have stepped in pretty big the last 6 months. Curious to see how this all phases out!