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Serious body blow to Yahoo

FOR those of you who thought that the “tech-wreck” was over, it is still not safe to dip your toe in the water!

Yahoo, once the darling of the “new media”, has just delivered the Internet sector a severe body blow.

Announcing their fourth-quarter results, which were in line with expectations, Yahoo prepared their investors with the news that the outlook for the future was dismal at best.

The figures themselves were surprisingly poor for Yahoo but the implications for the rest of the market was what analysts focused on.

Analysts had anticipated that the earnings per share Yahoo would achieve would have been of the order of US 58¢.

The figures Yahoo released indicated the earnings were only going to be US 33¢ to 43¢.

The result of the poor profit announcement was that Yahoo’s share price plummeted by as much as 20 per cent on the day’s trade.

Together with Yahoo’s shares, Ebay, DoubleClick and Amazon shares also fell by as much as 16 per cent.

The market capitalisation of Yahoo has fallen from $120 billion a year ago to now be capitalised at $14 billion.

Yahoo was always also seen as the barometer for the Internet.

Twelve months ago, the Internet was seen as the future for the media companies. Interestingly, a number of players in the sector are now downgrading their involvement in the Internet.

The most telling feature of the results are really the confirmation that the April “tech-wreck” is still continuing and that anyone who thought that it had passed has to re-evaluate their stance.

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