Yahoo’s quarterly earnings report came in $6 million below what The Street expected, and the stock is taking a beating as a result.
While the numbers are still high ($875 million in revenue, a 44% gain over last year), the consensus estimate was $881 million, so the stock is down $3.73, or almost 10%, in after-hours trading.
Also, expected third quarter revenue is below expectations, at $880-930 million. Even though the market is panicking, Yahoo did make the consensus estimate of 13 cents a share, so it bears worth repeating that it only missed the target by $6 million.
The company got a big boost in the number of users of its fee-based services like e-mail and fantasy sports leagues. Yahoo! reported that it had 10.1 million paid relationships at the end of the second quarter, up from 6.4 million in the same quarter last year and a 1.2 million increase from last quarter.
But analysts say marketing is far and away the biggest part of the company’s business. Yahoo!, like rival Google, has also been enjoying the robust online advertising market, particularly “sponsored” advertisements based on specific keyword searches. But Google has been the darling of Wall Street, surging up more than 250 percent since the company’s initial public offering in August and trading above $300 at times.
David Hallerman, senior analyst for New York-based research company eMarketer, said he thinks that Yahoo! is holding its own.
Diversity makes me feel confident about the company, more than search market share. Google maybe winning search advertising far and away, but Yahoo is such a multi-talented company that it isn’t going anywhere anytime soon.
Nathan Weinberg writes the popular InsideGoogle blog, offering the latest news and insights about Google and search engines.
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