Industry Insider on YHOO Q2: Big Negative Surprise

Take this for what it’s worth, but a well-placed insider at a major online media company puts the Q3 advertising revenue growth of competitors AOL (TWX) and Yahoo (YHOO) as follows. 

AOL:        +14%
Yahoo:    Flat   

Ordinarily we would pay little attention to this sort of info, but having just heard from one of our regular AOL sources that AOL would be at about 15% for the quarter, we are taking the Yahoo observation more seriously.  (We want to be clear that the source is NOT an insider at one of these two companies.  It is also possible that the source is referring only to U.S. revenue and that Yahoo!’s international revenue could save it.)

If Yahoo’s Q3 revenue were “Flat,” would this be a negative surprise?  Yes.  Yahoo itself forecasted Q3 growth of 4% to 17% at the end of Q2, with a central estimate of about 10%.  Wall Street analysts, meanwhile–at least officially–are looking for growth of 11%.

Given the recent turmoil at Yahoo, combined with weakness in the mortgage ad sector, the auto sector, and most traditional media advertising, this performance would not shock us.  But it’s almost certainly below what Wall Street is looking for.