Yahoo! Inc. fell Thursday for the secondday in a row, reaching a 52-week low after yet another analyst expressedconcern about the effect of slowing Internet advertising sales on thecompany.
Yahoo! dropped 2 9/16 to 34 15/16 after W.R. Hambrecht analyst Derek Browncut his investment rating on Yahoo! to neutral from buy, saying a weakmarket for online advertising could hurt the company through next year.
Brown said the downgrade reflects “continued advertising weakness.”
The current quarter, Brown wrote in a research note, “is proving to beextremely challenging for all participants.” He noted, however, that thecomments “are meant only to reflect near-term conditions, notlong-term questions about the viability of online advertising.”
On Tuesday, a research report from Merrill Lynch analyst Henry Blodget sent Yahoo!shares plunging. Blodget said he cut his first-quarter revenue estimate forYahoo! to US$290 million from $324 million, and lowered his second-quarterestimate to $330 million from $338 million, citing a “lousy” advertisingclimate.
Blodget, however, said he expects the stock to rebound in the second half ofnext year, and kept his full-year estimate for the company’s revenue to$1.45 billion.
Last week, Scott Reamer at SG Cowen Securities also lowered revenueexpectations for Yahoo!, which analysts say is heavily dependent onadvertising revenue. Analysts at other firms have lowered ratings on thestock in recent months. In October, SG Cowen and Dain Rauscher Wessels bothdowngraded Yahoo! from strong buy to neutral, and Janney Montgomery Scottdowngraded the company from accumulate to hold.
Online advertising companies are feeling pressure from continued cutbacks inspending by dot-com advertisers. DoubleClick and 24/7 Media are amongcompanies to announce layoffs in recent weeks.