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Yahoo! Inc. (NASDAQ: YHOO) Chief Executive Jerry Yang is going to have to convince investors that the company he helped found in 1995 still matters when it reports fourth quarter results later today. It's not going to be easy.The most visited Web site is expected to report its eighth straight quarter of declining profit. according to Bloomberg News. Analysts surveyed by Thomson Financial are expecting an average profit of 11 cents on revenue of $1.41 billion. Expectations, to put it kindly, are real low.
The view of Sanford Bernstein analyst Jeffrey Lindsay quoted by Bloomberg that Yahoo ``just isn't generating anything like the resources they need to really stay in the game" is typical. Yahoo shares have plunged more than 27% over the past year.
Unfortunately, Google Inc. (NASDAQ: GOOG) isn't the only company taking a bite out of Yahoo which trails the search engine giant in every conceivable metric. Social networking sites such as Facebook continue to siphon away young users coveted by advertisers as are smaller niche sites, forcing Yahoo to offer rate discounts to advertisers.
But there are a few reasons to remain optimistic.
Yahoo continues to attract a huge audience which advertisers cannot ignore. In an economic downturn, advertisers may shift dollars away from traditional media to the portal because it is so cost effective. Any improvement in its search market share would help its bottom line even if it continues to fall short of Google. Yahoo also is in the midst of trimming costs including layoffs.
Maybe, a leaner more focused Yahoo will emerge once the dust settles. Then again, investors have waited for a Yahoo turnaround for a long time and their patience is wearing thin.
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