Yahoo said yesterday it expects third-quarter revenue at the bottom half of its forecast range due to weakness from two of its biggest advertising segments, sending shares down as much as 13 per cent.
Chief Financial Officer Susan Decker told investors at a Goldman Sachs media conference that Yahoo has seen "a little bit of weakness in the last few weeks" in auto and financial services advertising.
"It's a new trend. It's been two to three weeks and we don't know yet if it's an indicator of a broader slowdown," Decker later told reporters at the conference. "We're seeing it enough to say something," she said.
"I don't want to overplay it either." Yahoo expects to deliver third-quarter revenue excluding traffic acquisition costs "at the bottom half of the range of financials" previously forecast, Ms Decker said.
On July 18th, Yahoo had forecast third-quarter revenue of $1.12 billion to $1.23 billion excluding traffic acquisition costs.
Traffic acquisition costs refer to the cut which affiliated Web sites take of Yahoo revenue for running Yahoo advertising on their own sites. Yahoo's comments also ignited concern for other Internet companies who rely heavily on advertising, including Web search leader Google, on the prospect the spending weakness would be felt across the industry.
Automakers in particular have moved a large portion of their advertising to the Web in the last three years, but industry leaders like General Motors and Ford have been slashing billions of dollars in total costs as they grapple with losses in the North American market.