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Yahoo will lay off 5 per cent of its staff: Report

Juan Carlos Perez | April 22, 2009
Result of Yahoo's Q1 revenue and profit tumble

Specifically, she expects that once the economic crisis lifts, companies will increase their spending on the type of online advertising Yahoo specializes in: display brand advertising in which marketers pay a premium for the quality and placement of the ads.

For now, Yahoo expects revenue for the second quarter to be in the range of $1.43 billion to $1.63 billion.

Google, which dominates search advertising, the most popular and least-impacted online ad format during the recession, posted financial results last week that were widely praised, considering the tough economic conditions.

Google reported revenue of $5.51 billion in 2009's first quarter, up 6 percent, and net income of $1.42 billion, or $4.49 per share, compared with net income of $1.31 billion, or $4.12 per share, in 2008's first quarter.

Google's dominance in search usage and advertising is one big reason for Yahoo's yearslong financial problems.

Yahoo has also in the past five years consistently misread other opportunities, like video sharing, blogging and social networking.

Last year, in the midst of a turnaround plan drafted by cofounder and then-recently minted CEO Jerry Yang, Yahoo received an unsolicited acquisition offer from Microsoft.

Yang, his executive team and the board were roundly criticized for what was perceived as an unwillingness to fairly consider the acquisition offers from Microsoft.

Microsoft eventually walked away in May, but has continued trying to strike a more limited search-advertising deal with Yahoo. On Tuesday, Bartz declined to comment about recent reports that the two companies have been holding talks over a possible search ad deal.

Yang announced his intention to step down as CEO in November and Bartz was appointed in January.

In February, Bartz implemented a reorganization intended to simplify Yahoo's notoriously complex corporate structure, so that decisions can be made more quickly.

Online advertising spending in the U.S. grew considerably less in 2008 than in prior years, reaching $23.4 billion in 2008, a 10.6 percent increase compared with 2007, the Interactive Advertising Bureau and PricewaterhouseCoopers reported recently. That growth rate pales in comparison to the 26 percent jump in spending recorded in 2007 over 2006.

In the fourth quarter of 2008, spending was $6.1 billion, up 2.6 percent compared with the same quarter in 2007, and 4.5 percent compared with 2008's third quarter, the smallest quarterly sequential increase since 2001, according to the report.

Search advertising broadened its lead as the preferred online ad format, accounting for 46 percent of spending in 2008's fourth quarter, up from 42 percent in the same period in 2007, the report found. For the full year, the search format had a 45 percent share, up from 41 percent in 2007. It has been the most popular ad format since 2004.


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