Yahoo is still having a very hard time in the
search market. The once dominant portal still has a generous amount of traffic
and its and advertising programs do well, but earnings are falling and
competition for the likes of Google and Facebook is making prospects for the
company look even worse.
Yahoo warned this week that its Q1 revenue
will slip again as the year starts with a whimper for the ailing
website. One of the big ways that Yahoo sought to improve its financial
position was the much talked about deal with Microsoft for search results and
profit sharing. The benefits of that search agreement with Microsoft have so
far not shown up.
Analyst Brian Pitz from UBS said, "This is
still a company [Yahoo] in transition that hasn't really got where it needs to
CEO Carol Bartz is exploring every option to
improve the position of Yahoo and so far many of the things she has done have
been to cut costs and many of the cost cutting measures have involved layoffs
and shedding underperforming properties.
Yahoo was looking to shed as many as 700
workers in December and more layoffs are coming. Yahoo announced the second round of
layoffs (which amounts to roughly 1% of its global workforce) the same day it
reported on its bleak Q1 2011 performance.
Bartz said, "I will not back down on the fact
that we are getting momentum. There is a lot going on here." The response
came after an analyst at the conference challenged her on declining revenue
despite execs claiming that progress was being made.
The execs from Yahoo did acknowledge that the
money expected to come in from the Microsoft partnership had so far not
materialized. However, they maintain that the benefits of the partnership
should come later this year. Some analysts don’t believe that.
Ben Schachter, an analyst from Macquarie Research
said, "One of the biggest benefits of the combination of Microsoft and
Yahoo was supposed to be on the RPS (revenue per search) side. We expected it
to happen already. We still don't understand why it hasn't happened. So I'm not
going to be giving them the benefit of the doubt that it will be magically
fixed by the middle of this year."
Yahoo has projected its net revenue at between
$1.02 billion and $1.08 billion for Q1 2011 and analysts were expecting $1.13