Yahoo hit by software launch delay

By THIS IS MONEY
Updated:

 

INTERNET giant Yahoo today suffered a big shares sell-off after postponing a software launch and posting disappointing sales figures.

The shares crashed 15% in Frankfurt, their biggest fall for more than four years.

Second-quarter revenue grew 26% to $1.58bn (£866m) compared with the same period last year - slightly below forecasts - while net profit was $164.3m, in line with analysts' expectations but 78% below the $754.7m it recorded this time last year.

But the company said that on a comparable basis, excluding investment gains but adding the effect of deducting employee options, the year-ago adjusted net profit was $152m.

Yahoo management said a much-anticipated change in its formula for displaying ad links will be delayed by at two or three months. Investors have been eagerly awaiting the new ad platform, hoping the improvements would enable Yahoo to do a better job displaying short ads for Yahoo's audiences to click. The clicks on those ads, which typically appear as text on the top and sides of Web pages, are critical because they trigger commissions for Yahoo and its partners.

Google's financial growth during the past two years has outstripped Yahoo's partly because it had developed a better formula for determining which ads to display alongside search results -- an advantage that even Yahoo Chairman Terry Semel conceded. 'We are not monetizing as well and it is costing us a lot of money,' Semel said.

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