• http://www.outsidethecurve.com Ryan Bruss

    I’m wondering if the earnings loss has anything to do with revenue generate through Yahoo Partner sites. In the old Yahoo system as an advertiser I could not opt out of the Partner traffic. All I could do is block certain sties and Yahoo set the max number of sites to block at 500. My experience was that the Partner traffic was of very poor quality to me as an advertiser. It rarely converted, but cost a lot. My guess is that this traffic made Yahoo a lot of money. In the new system I can, and did, opt out of the Partner traffic.

    In the above graph if TAC is the money Yahoo paid those Partner Sites, then the decrease in the last two quarters indicates advertisers are either opting out of the Partner traffic or Bing’s system serves ads differently on those sites or both.

  • Michael Tannenbaum

    Nice analysis. My only comment is that revenues are not earnings. More importantly to Yahoo is what is the profit of the deal long term. I would be concerned about declining revenue no matter how much the company is saving by effectively outsourcing search technology costs to MSFT. You might be missing an important point about valuation: profits not revenue drive valuation.