Yahoo hit by search and display ad revenue drops

Yahoo's revenue and profits both slipped in the fourth quarter of 2011, as the digital media company was hit by falls in display and search advertising, prior to the arrival of new chief executive Scott Thompson.

Yahoo: recorded revenue and profit falls in the final quarter of 2011
Yahoo: recorded revenue and profit falls in the final quarter of 2011

Excluding commissions paid to partners, Yahoo's revenue dropped 3% to $1.17bn (£750m) for the quarter ended 31 December, compared with $1.21bn in the same period last year.

Net income was down 5% year on year to $296m.

Display revenue was $546m, a 4% decrease, while search revenue was $376m, a 3% drop.

Revenues in EMEA, however, were up, from $106m for the fourth quarter of 2010, to $110m a year later.

Thompson, the former PayPal president who joined the company this month to replace the sacked Carol Bartz, said the 10% year-on-year increase in operating income to $242m showed how the company "continued to make progress."

He said: "In 2012, we will be aligning resources behind key areas of focus to enable us to move aggressively in market and grow our business, bringing innovative new products and experiences to both our users and advertisers."

Last quarter saw Yahoo sign an agreement with AOL and Microsoft to allow each to sell the others' premium non-reserved online display inventory, potentially boosting display ad sales.

News of Yahoo's decline in ad revenues comes in the week after the company's founder, Jerry Yang, announced his departure.

Last week, Google announced its total ad revenues for the last quarter of 2011 were up 24.6% year on year to $10.2bn.

Follow Sarah Shearman on Twitter @Shearmans

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