Blog Post

Yahoo Beats Estimates — But Don’t Call It A Comeback

The power of low expectations among analysts’ forecasts for Yahoo’s Q3 earnings helped lift the company’s stock price about 3 percent to $15.98 after the market close, but that didn’t mean that the company had much else to celebrate.

According to Marketwatch, analysts surveyed by FactSet Research had forecast Yahoo (NSDQ: YHOO) to earn 17 cents a share — EPS was actually 32 cents — on $1.07 billion in revenue.

The news is that despite its wide reach as one of the top sites on the web, display sales were flat (on a GAAP basis, display slipped 2 percent) and search revenues fell 13 percent, a sign of continuing trouble for the company’s board as it considers sale offers following the unceremonious ouster of Carol Bartz as CEO last month.

At a time when eMarketer says online ad spending grew 19.1 percent to $7.70 billion in Q3, Yahoo’s display troubles reflect previous warnings about the restructuring of the company’s ad sales team.

Beyond that, trends are favoring Yahoo’s non-portal rivals, Facebook and Google (NSDQ: GOOG).

Facebook is expected to pass Yahoo in US online display ad revenues for the first time in 2011, as the social network’s share of the $12.33 billion U.S. display ad market reaches 16.3%, up from 12.2% last year, eMarketer figures suggest. Yahoo’s share expected to decline to 13.1 percent in 2011, down from 14.4 percent in 2010. Meanwhile, Google will top $1 billion for the first time in 2011, as the company’s share of overall U.S. display revenues rises to 9.3 percent, eMarketer estimates, up from an 8.6% share in 2010.