Global Equities Research has reduced its profit and revenue estimate of Yahoo Inc. (NASDAQ: YHOO), saying the Internet firm is still losing advertising dollars on display and search properties to Google and other sites.
The brokerage cut its third-quarter GAAP earnings view by 3 cents to 15 cents a share and revenue forecast, excluding traffic acquisition costs, by $36 million to $1.04 billion, representing a decline of 48 percent and 7 percent from last year, respectively.
Wall Street expects Yahoo to earn 17 cents a share on revenue of $1.07 billion, according to analysts polled by Thomson Reuters.
For fiscal 2011, the brokerage now expects GAAP earnings of 66 cents a share on revenue of $4.26 billion, representing a drop of 26 percent and 6 percent from last year. Earlier, it expected earnings of 68 cents a share on revenue of $4.31 billion.
Analysts estimate earnings of 74 cents a share on revenue of $4.43 billion for 2011.
Our research indicates that Yahoo today is in much weaker position than before and the company fundamentals continue to deteriorate. Yahoo continues to lose ad-spend on its display and search properties, Global Equities Research analyst Trip Chowdhry wrote in a note to clients.
The brokerage, which spoke to no less than 25 eMarketers, said that display ad-spend on Yahoo premier properties is probably down 3 percent to 5 percent sequentially, with ad-spend shift happening to user-generated content versus branded content.
Converged view is that eMarketers are shifting their display ad-spend from Yahoo premier properties including Yahoo home page into experimental category, Chowdhry said.
The following are the experimental categories where the display ad-spend shift from Yahoo is happening:
* Facebook Fan Pages
* Google YouTube
* Social Games
The Ad-Spend shift away from Yahoo Display is probably irreversible, as eMarketers feel user-generated content provides better micro-targeting and monitoring of their digital marketing campaigns, wrote Chowdhry, who has a price target of $12 on Yahoo stock.
Shares of Sunnyvale, California-based Yahoo closed Wednesday's regular trading session at $14.19 on Nasdaq.