Yahoo! shares slide as it warns of ad weakness

by Staff, Brand Republic 20-Sep-06, 09:00

NEW YORK - Yahoo!'s share price has tumbled by 11% after warning of weakness in advertising revenues for the quarter.

Shares were down by $3.25 to $25.75 at the end of trading on Tuesday evening, as Yahoo! said that pressure in the automobile and financial services industries meant that ad revenues were lower.

Automobile makers General Motors and Ford are among the largest advertisers in the US, but have been cutting ad budgets in the face of enormous financial difficulties.

At an investor conference, Sue Decker, chief financial officer at Yahoo!, said: "We have seen a little bit of leanness in the last three or four weeks in those two categories, and it is having an impact on our quarter."

The company said that its results would be at the lower end of forecasts as a result.

Yahoo! was not the only internet company to see its share price fall as a result. Google was down by 2.6%, eBay by 3.3% and Amazon by 1.6%.

It has been a disappointing year for Yahoo!, after reporting in July that net revenues were below market expectations, leading to another fall in its share price.

Online advertising revenues continue to grow, but marketers are growing more savvy to investing in search engine optimisation and contextual advertising. This is leading to a move away from display advertising on the web.

If you have an opinion on this or any other issue raised on Brand Republic, join the debate in the Forum.