Stifel analyst Jordan Rohan put out a note this morning reducing estimates for Yahoo’s financials in the third quarter “and beyond.”
The main reason?
Yahoo’s search share is tanking at an alarming rate.
That’s a problem because search is a pure profit centre for Yahoo. Rohan decreased his Q3 revenue projection for Yahoo $80 million and his EBITDA projection $70 million.
Here’s a chart based on ComScore data of Yahoo’s core search “growth”:
Yahoo outsources search tech and search monetization, and Yahoo.com isn’t growing much at all.
You might think that this kind of atrophy is normal for a company in that position. You’d be wrong.
Look at AOL, which outsources search to Google:
And look at Ask, which also uses Google:
The silver lining for Yahoo, YHOO owners, and Mayer is this: Looking at AOL and Ask reveals search growth can turn around.
It might help for Yahoo to switch to Google. The DoJ barred Yahoo from doing that back in 2009, but it’s obviously a different era now.
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