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Most of the conversation about Yahoo! (NASDAQ: YHOO) centers around how big a change new CEO Carol Bartz will make in the management ranks.
The bigger story may be that Yahoo! could lose money this quarter, especially if it is facing the 25% drop in display ads income that many other large internet companies are.
In the first quarter of 2008 Yahoo! had revenue of $1.8 billion and operating income of $121 million. Some of Yahoo!'s income is from its search advertising. It still holds about a fifth of the U.S. market. And, the company has cut costs. But this may not be enough.
If Yahoo!'s revenue drops by 15%, it would fall to $1.53 billion. Its sales, less the costs of acquiring traffic, could be as low as $900 million. Taking out one-time items, Yahoo!'s expenses were just below $900 million in the first quarter last year.
If Yahoo!'s revenue is off much more than 15%, there is some real chance it could post an operating loss.
Douglas A. McIntyre is an editor at 24/7 Wall St.
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