Yahoo! has blamed a fall in advertising revenues for an 18% drop in profits for the second quarter to the end of June. The weak results come less than a week before its annual meeting where shareholders could press for executives to agree to a takeover deal with Microsoft.
Yahoo! says a “softness” in advertising in the finance, travel and retail sectors was a result of recent economic trends. The company says it has seen strong year-on-year growth in display and search advertising in the entertainment and technology sectors.
Despite net income of £65.3m, an 18.6% drop compared to the same period last year, Yahoo! chief executive Jerry Yang insisted the company is “executing against its strategy”.
The results come after Yahoo! announced on Monday it had made a deal with agitator investor, Carl Icahn, who wanted to sell to Microsoft. Icahn agreed he would not try to replace the entire Yahoo board at its annual meeting on 1 August.
Icahn, who owns 5% of the company, and two of his appointees have been given seats on an expanded board in return for ending his attempts to oust the existing board at the meeting.
Yahoo!’s worse than expected results come less than a week after Google’s second quarter results also fell short of expectations, with both companies feeling the effects of reduced spending on online advertising.
Yang says Yahoo! is well positioned for long-term growth and pointed to key partnerships the company made in second quarter. These include a search advertising deal with Google and working with agency partners Publicis, WPP and Havas.