Yahoo search revenue tumbles again

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Yahoo's second-quarter search advertising revenue dropped 45% year-over-year to $466.7 million, continuing the double-digit declines the company has seen in the category in the past two quarters. Yahoo's display advertising revenue ticked up 2% year-over-year to $523.5 million.

Overall revenue for the quarter fell to $1.2 billion, a 23% drop compared with the previous year. Yahoo's net income grew 11% year-over-year to $236.9 million.

“We experienced softness in display revenue in the second half of the quarter due to comprehensive changes we have made in our sales organization to position ourselves for more rapid display growth in the future,” Carol Bartz, CEO of Yahoo, said in an earnings statement.

Search and display advertising generated 81% of Yahoo's total revenue in the quarter. Yahoo's search partnership with Microsoft, through which Microsoft provides search technology for Yahoo sites, siphons 12% of Yahoo's net search ad revenue to the Redmond, Wash.-based company.

When Yahoo announced its first quarter earnings in April, Bartz said the Microsoft partnership had hindered the company's search ad revenue and wasn't producing the expected revenue per search (RPS). During a July 19 earnings call, she said Yahoo had closed “approximately one-fifth of the RPS gap” that existed in April. The company is “on track to achieve RPS parity by the end of the year,” said Bartz.

The company shrunk its spending on sales and marketing to $280.3 million in the period, down 15% from the previous year.

Yahoo reported a 1% increase in search page views in the quarter but views of the company's communications and community pages, such as Yahoo Mail, declined by 8% year-over-year.                                           

Yahoo cut its workforce by 5% during the second quarter, leaving the company with 13,400 full-time employees.

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