14 DAY TRIAL // After the eighth straight quarter of declining profit, Yahoo!'s future definitely looks dark and cloudy. And what a drop in net income it was, really. Analysts, questioned by Bloomberg, have come together with a number and it was a scary one: almost 43 percent a decrease. In dollars, that means only 155.8 million, or 11 cents per share.
Today is the day that Jerry Yang has to let some of his employees go. Despite knowing that he will only cut from the fat and leave the bone and muscle there, he cannot but be melancholic when it comes to letting go of people he knows and has worked with. Nevertheless, it must be done and, as inside sources kept reporting, something between 5 and 10 percent of the entire staff will be "retired," if I am to not use a stronger word.
It looks like Yahoo!'s last bet was the investment it had made in online advertising, and that it did not pay off. Google is still the champ of the ad ring and the Sunnyvale-based company never even made it close to throw a punch. Next, after Google will probably be done toying with it, the K.O. will be inevitable. The domains? Exactly where the two are trying to set a foothold: mobile-phone advertising, social networking and web video. Google is clearly wiping the floor with Yahoo in the latter two and is roughly its equal in the former (a small bonus for Jerry Yang's company, though).
Just a quick comparison, Yahoo! generated 155.8 million in the fourth quarter of 2007, while Google is somewhere around the figure of 1.25 billion over the same period. It's a clear sign who has the resources to further invest until the other one might be driven out of the market, right?
Jeffrey Lindsay, analyst at Sanford C. Bernstein & Co., said that Yahoo "just isn't generating anything like the resources they need to really stay in the game." With what's going on right now, I tend to believe him.