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Yahoo’s Profit Margins Decrease Despite Search Share Growth

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Yahoo’s Profit Margins Decrease Despite Search Share Growth

The web advertising war is a vicious one, with a large number of competitors in the field. The dominant player is Google, with AOL, Microsoft, and Yahoo all playing their part here. The site Facebook doesn’t compete directly here, as its advertisements are limited to its own property, but it nonetheless siphons off advertiser dollars that may have otherwise been invested in the search engine advertising groups.  Due to the pressure from its competitors, as well as the diminished investment overall thanks to social media and other platforms, Yahoo is struggling to maintain its revenue stream.

This may come as something of a surprise, especially considering that last year (depending on the report and time-frame) saw as much as a three percent growth in market share (a 25% increase overall). However, the loss of Yahoo properties is just one of the issues Yahoo is up against. According to a report by Forbes, Yahoo’s profit margins decreased by a full 10% (from 30% to about 27%).

The Forbes report is still a believer, however, predicting that things will increase dramatically in the short term. They predict that these margins may go as high as about 40%, in fact, before they dip back down to a more stable figure (which they put at about 33%). This is largely thanks to other monetization options for Yahoo, including their presence in media and entertainment.

Still, while Forbes recommends buying Yahoo stock and giving the company some faith (their figures even predict numbers a good chunk higher than those given by other analysts — which think that the end stabilization point for Yahoo is likely to be about 29%), they also state that the next few years will show Yahoo in a losing battle with both Google and Facebook.

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Rob D Young

Rob has been insatiably obsessed with Google, search engine technology, and the trends of the web-based world since he began ... [Read full bio]

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