Yahoo Revenues Up, As Profits Fall

Internet search giant Yahoo has today seen a significant rise beyond market expectations in its revenue over the third quarter of the year, despite falls in bottom line profit figures as a result of increased costs in its ongoing fight for market share in the search industry.

In its third quarter results to September the company reported an increase in revenues to $1.8 billion, up 12% from last year’s results. However net profit figures reflected a substantial down turn over the same period, as a result of an increase in direct and indirect costs of service.

Most of the excess expenditure fell within the sales and marketing division, with increased promotional spend accounting for a substantial decrease in profits over the period.

Yahoo is currently chasing Google as the world’s second most significant search engine, finding most of its revenues from advertising and leveraging online media assets. Through its flagship search engine as well as independent media holdings, Yahoo provides extensive internet services to advertisers, rather than focusing on the subscription model pursued by other competitors.

It had been hoped that through continuing to provide innovative advertising driven services it could gain ground on Google. However today’s fall in profit figures will be yet another setback in what many have described as the losing battle to increase market share.

Profits over the period were down by 5% to just over $150 million, with marketing costs the biggest offsetting force, up to $877 million, over $200 million up from last year. It has predicted that year end results will however recover to champion top end expectations.

Yahoo are looking to follow AOL in consolidating their media operation, as internet companies continue to make a move towards predominantly advertising-based websites towards year end figures and sustainable future growth.