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Yahoo searching still to beat Google
Yahoo Inc. said yesterday that its fourth-quarter profit fell 23 percent after customers switched to Google Inc. for online searches and a slowing economy weighed on Internet advertising.
Net income dropped to $205.7 million, or 15 cents a share, from $268.7 million, or 19 cents a share, a year earlier, the Sunnyvale, Calif., company said yesterday in a statement. Excluding revenue passed on to partner sites, sales rose 14 percent to $1.4 billion, compared with analysts' estimates of $1.41 billion.
Yahoo's failure to crack Google's search engine dominance has contributed to eight straight quarters of declining profit and three years of slowing sales growth. If the U.S. economy slumps, Yahoo will be dealt a bigger blow than Google, said Colin Gillis, an analyst at Canaccord Adams Inc., of New York. Advertising on Google may be seen as a safer bet during a slowdown, he said.
Yahoo forecast first-quarter sales, excluding traffic-acquisition costs, of $1.28 billion to $1.38 billion, compared with analysts' average estimate of $1.38 billion, according to a Bloomberg survey. Traffic-acquisition costs are the sales that Yahoo pays partners to use its ad technology.
Yahoo's investments in online advertising, which accounts for most of its $6.5 billion in annual sales, have failed to stem losses in market share to Google.
Yahoo upgraded its search service in October to include links to songs, videos and photos. Still, Google's share of U.S. queries climbed to 56 percent in December from 54 percent three months earlier, according to Nielsen Online. Yahoo's fell to 18 percent from 20 percent.
