Yahoo reports lower than expected revenue on shrinking advertising demand

Yahoo! Inc, the largest US web portal, reported revenue and forecast sales that fell short of estimates as waning demand for display advertising underscored the challenge facing new chief executive officer Scott Thompson.

Excluding sales passed on to partner sites, fourth-quarter revenue was down to $1.17 billion, according to Sunnyvale, California-based Yahoo's statement yesterday. This is against the $1.19 billion, the average projection of analysts surveyed by Bloomberg. Sales in the current period would touch $1.03 billion to $1.11 billion, according to Yahoo.

Analysts had predicted it would touch $1.08 billion.

Web users, rather than spending time on Yahoo's pages, seem to prefer such social networks as Facebook Inc and search results generated by Google Inc. Display-ad buying was crimped with the economic weakness in Europe, chief financial officer Tim Morse said in an interview. Thompson, who this month succeeded the ousted Carol Bartz, is trying to bring about a reversal of Yahoo's market share losses and user defections as it completes a strategic review that may involve selling Asian assets.

In the US online-advertising market, Yahoo's share shrunk to 11 per cent in 2011 from 13 per cent a year earlier, according to EMarketer Inc in New York.

 Yahoo's display revenue was down 4 per cent at $546 million last quarter, after remaining unchanged in the third quarter, a report said yesterday.