Yahoo Q3 Earnings: Not So Bad, Layoffs to Begin

Yahoo reported this week that Q3 earnings are $1.7b, a 1% increase compared to the same period in 2007 with no change in fee revenues ($224m) and a 53% decrease in operating income, attributed mostly to the costs associated with the agreement Yahoo entered into with Google to fend off Microsoft's takeover bid. Net profit fell 64% to $54m or 4 cents a share.

"Despite a tougher revenue climate, we were able to stay focused on our strategic objectives, launching several major product initiatives that have been underway for many months,” said Sue Decker, president of Yahoo!, Inc. “These include the beta release of our new home page, which will leverage one code base globally; our new universal profile management tool at profiles.yahoo.com which is the first step toward rewiring the social graph on Yahoo!; and the launch of APT from Yahoo!TM, a transformative digital advertising platform. We delivered on our product roadmap with high quality and lower expenses than originally anticipated. Now we are conducting a deep review of our cost structure to identify more opportunities to enhance efficiency and build a stronger and more profitable Yahoo!."

Yahoo is expected to announce layoffs, estimated at 1,500 people (from a staff of ~14,000). A decline in digital ad spend is a significant factor in the company's stock performance. Other companies have announced similar "belt-tightening" in anticipation of a year-long decline in marketing & consumer spending.

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