Analysts Forecast Further Troubles for Yahoo

23 September 2008

SUNNYVALE, California: Beleaguered online search titan Yahoo could be in for a difficult third quarter, according to analysts, as the credit crunch triggers a drop-off in display advertising, and a lack of innovation discourages new investors.

Online display ads, in particular, are predicted to be one of the major victims of falling levels of consumer demand, as advertisers seek to make major cutbacks in their marketing budgets.

Colin Gillis, an analyst New York's Canaccord Adams, said: "It's widely suspected that the September quarter is going to be very weak for display-based advertising, which is Yahoo's bread and butter.

"Yahoo got taken over by speculative money and new fundamental investors have no particular reason to jump into the name."

Some 90% of Yahoo's income is advertising-based, and it has already attempted to bolster its position via a tie-up with Google, currently under review by the US Justice Department.

The company's co-founder David Filo has argued that this agreement, alongside Yahoo's decision to allow other companies to design features for its various portals, will be the main drivers of growth over the next five years.

Data sourced from (China); additional content by WARC staff