The layoff rumors are true. Yahoo!
The headcount isn't the only thing getting smaller at Yahoo!. The company's first quarter was another humbling round of shrinking financials. Revenue excluding traffic acquisition costs fell by nearly 15% to $1.156 billion. The company's profit fell to $0.08 a share, or $0.15 a share on a non-GAAP basis.
To get a cleaner snapshot of where Yahoo! is heading, let's take a look at areas where it's not going. The following areas dragged down the company's top-line performance.
- Fee-based revenue fell by 20%.
- Affiliate sites contributed marketing revenue that was 16% lower than last year.
- Its international operations suffered a 24% haircut on the top line.
Fee-based revenue is a small slice of the overall revenue mix pie, but it has always been seen as Yahoo!'s diversified strength, relative to the ad-centric Google
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Affiliate revenue, which is the revenue that Yahoo! scores by syndicating its ads on third-party sites, continues to be a bleeder. Is Yahoo! simply making bad bets or are all publishers just flocking to market leader Google?
The international dip is understandable, given the strengthening dollar versus European currencies, but it's got to hurt to see Google grow overseas and international search stars like Baidu
This doesn't mean that Yahoo! would have been a speedster without its laggards. Stateside revenue and marketing revenue for its owned and operated sites fell by 9% and 10% respectively.
CEO Carol Bartz has responded by slashing paychecks and closing smaller sites, but that's more a game of capital preservation -- which may not be necessary given the company's cash balance of nearly $3.7 billion -- than growth.
There is also Microsoft
If Microsoft wants to buy Yahoo! whole, Bartz should definitely listen, but it doesn't make sense to dilute its already diminishing stature in online advertising by teaming up with a bigger laggards like Microsoft.
Nobody wants to keep shrinking forever.
The world according to Yahoo!: