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Yahoo Earnings Slip Despite Posting Profit in Q4

Stephen Logan

by Stephen Logan on 26th January 2011

The figures are still adding up for Yahoo (just about), but decent profits can’t mask underlying issues following the search company’s fourth quarter figures.

As with the third quarter report, the latest figures on Yahoo’s financial state are a mixed bag. Whilst the company managed to pocket a respectable profit of $312million, revenue slumped to a meagre $1.2billion [see: Yahoo sales slide as rivals gain ground | FT].

Whilst most would be happy bringing in over a billion dollars in revenue during a three month period, any joy that Yahoo may have must surely be tempered by the news that Google almost quadrupled this figure during the same quarter. Their search rivals reported a 29% year on year increase in earnings last week, which saw them bring in $8.44billion.

Financial reports have become a typical good news/bad news time for Yahoo in recent years. Every positive always appears to have an equal negative. So for instance, whilst ad impressions during the quarter increased by 15% (a good sign that people are using their search services), their overall revenue from search actually fell by 18%. This may be explained away by their search/revenue sharing with Microsoft, but it still offers cause for concern.

Google, of course, are flying. They posted huge Net profits of $2.85billion in the same period (that’s more than double Yahoo’s entire revenue!) and have increased staff by over 1,000 – albeit with the loss of one rather important chap [see: Google’s Growth Overshadowed by Management Reshuffle]. Conversely, over at Yahoo profits are slipping, they’ve had to get rid of hundreds of employees and have seen their share price fall by a further 2% thanks to this latest good news/bad news.

Whilst Yahoo has reported that their page impressions have remained flat, their overall search engine market share is slipping. During the last half of 2010 alone, Yahoo surrendered 1.9% share in the UK market and 2.3% in the US, where they have traditionally performed very well [see: Search Engine Market Share Statistics – January 2011].

These figures shouldn’t be painted as a complete failure by Yahoo, they are still in profit remember. However, there is plenty to be concerned about for the long-term, particularly if they need to strip assets and lose staff to balance the books.

The search partnership with Bing and their adCenter PPC platform will be extremely important. So too will display advertising, which is a major source of income for Yahoo and has delivered strong results again in Q4 with a 16% upturn being delivered. Unfortunately, with Google dominating Paid Search and Facebook taking market share in display advertising, these solid revenue streams could also be under threat soon too.

Stephen Logan

Stephen Logan

Stephen Logan is our Senior Content Marketer at Koozai. With four years experience writing exclusively for the search engine marketing industry, he has amassed a wealth of industry related knowledge. He will be breaking news stories and contributing compelling SEO related stories.

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