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Despite Profits Rising, Yahoo Revenue Falls

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Yahoo has reported a rise in net earnings despite a fall off in revenue in the last quarter as issues with Microsoft and management reshuffles affect the company’s results.

Yahoo reported revenues for the past threes months of $1.08 billion which represents a 5 per cent drop compared to the previous year. However despite this drop, Yahoo recorded net earnings of $237 million for the quarter, which represents an 11 per cent rise year-on-year. A much more worrying indicator though was the revelation that search revenue declined 45 percent year-on-year to $467 million.

                      Carol Bratz Yahoo

Revenue levels were below analysts’ predictions and in a statement, Yahoo blamed the poor results on a search- and revenue-sharing deal signed with Microsoft in 2009 as well as reorganization within the company. In Yahoo’s statement, CEO Carol Bartz (pictured above) blamed the softness on “comprehensive changes we have made in our sales organisation to position ourselves for more rapid display growth in the future.”

According to Yahoo CFO, Tim Morse, the deal with Microsoft had hurt Yahoo’s revenue per search but the companies were working to rectify the issue. Yahoo has also says it doesn’t expect revenues to rise to pre-Microsoft levels until the end of the year.

The company forecast third-quarter net revenue, which excludes the fees that Yahoo pays to partner websites, of between $1.05 billion and $1.1 billion.

While Yahoo is struggling to maintain its market share in the face of competition from the likes of Facebook, search giant Google continues to post record profits and as well as beating it in terms of search ad revenue, the Mountain View company is now selling more display ads than Yahoo.

Source: Reuters

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