Yahoo Shares Plummet On Flat Earnings; GOOG Hurt As Well

Yahoo Shares Plummet On Flat Earnings; GOOG Hurt As Well

By Nathan Weinberg

Yahoo delivered a weak earnings report, sending shares crashing almost 13% in after hours trading. The crossfire knocked other stocks for a loop, including Google, which fell $18.

Yahoo didn’t lose money or anything, it just had flat growth and missed estimates by a penny, which may indicate the market has been a tad too exhuberant about the size of the internet ad market. I’d worry about Google’s earnings report in two weeks.

Several financial analysts said the Yahoo’s earnings shortfall — it missed the average estimate by a penny — reflected flat growth in gross margins and higher than expected operating expenses. Chief Financial Officer Susan Decker said expenses were up as the company invested in high-growth areas.

Yahoo stock has also been weighed down by competitive concerns over the faster growth of rival Google and the imminent loss of key advertising customer Microsoft, which is gearing up to compete more actively itself in online ads by the middle of this year.

Yahoo: After Hours ECN: 34.96 -5.15 (-12.84%) 17 Jan at 7:59PM ET

Google: After Hours ECN: 449.01 -18.10 (-3.87%) 17 Jan at 7:59PM ET