Yahoo's Earnings Drop Despite New Ad System

By Peter Fearon,  Newser Staff
Posted Apr 18, 2007 8:33 AM CDT
A Yahoo! headquarters sign is shown in Sunnyvale, Calif., in this file photo from Jan. 22, 2007. Yahoo, a major online destination for news, regularly displays foreign news from a number of outlets...   (Associated Press)

(Newser) – Yahoo's new online advertising system failed to break the company's earnings slump, with the search-engine pioneer reporting an 11% drop in first-quarter profits. Yahoo faces increased competition for graphic display advertising that represents a third of revenue, and the company is no longer doing ad brokering for Microsoft, which bolstered revenues last year.

Yahoo had warned that profits on the new ad system, dubbed Project Panama, wouldn't kick in until the second quarter, but shareholders had been hoping the company would beat predictions. Yahoo's stock dropped 8% in after-hours trading, though it is up slightly this morning.