YHOO share price drop after CFO statement
Amit Chowdhry | Tuesday September 19, 2006 | 720 views
The CFO of Yahoo.com made a statement that its Q3 results would be hurt because of a slowdown of the financial and automotive sector advertising growth. CFO, Sue Decker, made this announcement at a Goldman-Sachs investor conference and announced that it’s too early to tell if the slowdown is contagious in other areas as well or how long this decline would last.
“It’s a new trend. It’s been two to three weeks and we don’t know yet if it’s an indicator of a broader slowdown,” Decker stated. “We’re seeing it enough to say something. I don’t want to overplay it either. We’re going to watch and wait.”
These statements have affected Google (GOOG) stock as well as investors fear that this weakness has spread to other web advertisers. From 11:30AM-12PM EST, Google’s stock dropped from roughly $415/share to $392/share and is steadily climbing back up again. Between 11:30AM-12PM EST, Yahoo’s stock was roughly $29.13/share before the announcement and then sunk to $25.10/share, but isn’t recovering as quickly as Google is.
In several statements, Martin Pyykkonen an analyst with Global Crown Capital, said that this is more of a global problem and isn’t just limited to the Internet industry. “It feels and smells like a macro” and “It would be naive to say that advertisers would continue to pour ahead on online advertising and cut back only on traditional advertising in the face of economic weakness.”
This is more negative press for Yahoo! on top of Quito stealing one of Yahoo!’s major clients, ESPN.com. However, TechCrunch stated that Yahoo! is in the works of releasing a new advertising program called Panama that will be released in Q1 of 2007.
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