# Yahoo Revenue Falls For Third Straight Quarter; Search Revenue Tumbles 15 Percent

Yahoo (NSDQ: YHOO) posted a big drop in net revenue Tuesday, as the internet giant continued to suffer from a weak online advertising market for both search and display ads. The company did, however, manage to beat analysts’ expectations for earnings per share, thanks to its cost cutting efforts. Net income increased nearly 8 percent during the quarter.

It was the third quarter in a row, however, that Yahoo’s net revenue had fallen — and the drops appear to be accelerating: The company’s net revenue fell 2 percent year-over-year during the fourth quarter of 2008, 14 percent in the first quarter, and 16 percent this quarter. By contrast, Google (NSDQ: GOOG) reported last week that it had managed to eke out an increase in revenue during its second quarter, although it is much less dependent on sales of display ads than Yahoo is.

2Q 2008 2Q 2009 Estimate
EPS $0.09$0.10 $0.08 Net Income$0.131B $0.141B Revenue$1.35B $1.13B$1.14B

Search: Last quarter, the company posted a three percent decline in year-over-year search advertising sales. Search advertising revenue on its owned and operated sites dropped 15 percent this quarter, more than analysts had expected.

Display: Display took a similar hit; with sales down 14 percent. A quarter ago, the company’s display ad revenue fell 13 percent.

Revenue from affiliate sites: Revenue from affiliate sites dropped 9 percent to $520 million. Cost-cutting: The company said that it continued to implement “non-headcount cost reductions.” Yahoo laid off nearly five percent of its workforce during the quarter and the company said it had taken a$65 million charge due its restructuring efforts.

Outlook: Income from operations is expected to be between $55 million and$65 million during the third quarter, down from the \$76 million in income from operations it posted this quarter.