Yahoo's profits come at a price

Yahoo Profits

Following a recent announcement from rival Google reporting a rise in profit during the recession, Yahoo has seen its third quarter profits more than treble.

Google, of late have been boosted significantly by the internet ad market, yet Yahoo have had not fared so well, seeing their sales fall by 12 percent.

Instead Yahoo have resorted to making drastic cuts in order to improve its bottom line, including cutting more than 2,000 jobs during the past year.

The company may have earned $186 million compared with $54 million in the same period last year, but revenue fell to $1.58 billion.

Struggling to lure advertisers

Whilst Google have managed to turn its position as one of the world's most popular websites into profits, Yahoo have fallen well short. It is still struggling to lure back advertisers that left as part of cut back schemes during the worst of the recession.

In July, Yahoo merged its web search technologies with Microsoft that will make Yahoo the sales team for banner advertising for both companies. However, the deal is waiting on regulatory approval that is not expected to be granted until next spring. But the recent figures suggest that the hill is just too steep for Yahoo to climb in order to make up ground on Google.

Since Carol Bartz joined the company, Yahoo has tried heading in a different direction. The launch of a $100 million ad campaign to launch its new web portal was met with raised eyebrows from some who failed to see the point in spending so much cash on a campaign that only serves to remind people that they do not offer a better alternative to Google.

Opening to rivals

The BBC reports that Yahoo is even opening up its home page to rivals, allowing users to integrate third-party web services like Facebook or Hotmail into its portal.

"We knew the new management could drive some of the cost out of the system, but we want to start to see what can be done to have the company return to growth," said Olin Gillis, an analyst at Brigantine Advisors.

"This is a company that's still very much in the process of being restructured. It's a mild positive. They're doing what they're supposed to be doing," he added.

But one can't help to think that no matter what Yahoo try, efforts to topple Google, whether alongside Microsoft or by itself, will be futile. Even the release of figures that point to profit are tainted with falls in revenue and huge job cuts.

We may never again see the day when Yahoo are yodelling from the summit of the web search mountain.

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