Yesterday Yahoo said that it earned $205.7 million, or 15 cents per share, during 2007’s final three months, a 23 percent drop from net income of $268.7 million, or 19 cents per share, at the same time in 2006. Revenue for the period totaled $1.83 billion, a 8 percent improvement from $1.7 billion in 2006. This means that Yahoo fourth quarter profit dropped by 23 %. As a result Yahoo is firing its employees to cut extra costs.
Last year marked the first time Yahoo’s earnings have dropped from the previous year since the company lost $93 million in 2001 during the aftermath of the dot-com bust. That was also the last time that Yahoo fired hundreds of its employees. But the company’s 2007 profit fell 12 percent to $660 million even though advertisers spent more than ever on the Internet, where Yahoo still draws one of the largest audiences on internet. Still Yahoo is number 1 according to Alexa traffic ranking. The main problem is that yahoo is unable to attract new internet users who are feeling more comfortable on competitor sites like facebook.com, orkut.com, myspace.com, youtube.com etc. In my opinion the new social networking revolution on internet has posed serious challenges to the existence of yahoo. Even yahoo’s attempt to enter social networking through yahoo mash is also not up to the mark.
Four years back I used to visit yahoo for emails, messenger, news etc. But for these things now I go to gmail, google talk and google news respectively. Actually google is creating huge problems for yahoo. Remember google was smaller company than yahoo 3 years ago. In my opinion, the time has come for yahoo to bring some new innovative product into the internet market otherwise it will be very difficult to survive the cut-throat competition. Even yahoo co-founder Jerry Yang, who returned as chief executive seven months ago, signaled the company has challenges ahead.

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