The chance that Yahoo Inc. will put itself up for sale has reportedly increased since the company lowered its revenue forecast, according to Stanford Group, and one of its analysts reportedly said Microsoft Corp. is a candidate to buy the company.

Published: 18 Jul 2007

The chance that Yahoo Inc. will put itself up for sale has reportedly increased since the company lowered its revenue forecast, according to Stanford Group, and one of its analysts reportedly said Microsoft Corp. is a candidate to buy the company.

Microsoft Corp. is a candidate to buy the company, analyst Clayton Moran said, according to Bloomberg News.

“Given a seemingly increasing disconnect between management commentary and operating results, a sale of Yahoo seems more likely,” Moran reportedly wrote in a note to clients. “In the near-term, we believe this stock will linger in the mid-$20s, unless a suitor arises.”

A Yahoo-Microsoft union “could be a significant challenger to Google and could increase Microsoft’s competitiveness,” Moran said.

Meanwhile, Yahoo reported that its profit dipped to $US161 million in the second quarter. Yahoo’s overall revenue for the quarter ending June 30, 2007 was $US1.24 billion, an 11 per cent increase from the same period last year, but it logged US$3 million less in profit.

Yahoo said it now expects revenue for the full year, excluding traffic acquisition cost, to be in a range of $4.89 billion to $5.19 billion. The company forecast in April that sales would be in a range of $4.95 billion to $5.45 billion for 2007. Analysts had been expecting revenue of $5.19 billion.

For the third quarter, which ends in September, Yahoo said sales would be in a range of $1.17 billion to $1.31 billion. The $1.24 billion mid-point of this forecast is below Wall Street’s consensus estimate of $1.3 billion for the third quarter.

“I am focused on doing everything we need to do to strengthen our business, capture long-term growth opportunities and create increased value for our shareholders,” said Yahoo Co-Founder and Chief Executive Jerry Yang said. “By sharpening our focus, speeding execution, building our technology and talent, and investing in key growth areas, we can put Yahoo! on a clear path to fulfill its potential as an Internet leader.”

Google is expected to capture 27.4 percent of the $21.7 billion in United States online advertising this year, far more than Yahoo’s 16.3 percent share, according to estimates released yesterday by eMarketer, a research firm. The gap between the two companies is larger than last year, when Google had 24.3 percent of the online United States advertising market, and Yahoo 17.8 percent.