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July 19, 2006

Yahoo!’s Bad Day

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Yahoo!’s having a tough Wednesday and the puns just keep on coming.

CNN says Yahoo! investors won’t have any reason to yodel…
Om Malik says Yah-oh
John Murrell says Yahoo? More Like Boohoo

And that’s just a small sampling. Believe me, it got worse as the day progressed. What caused all this rhyming and punning nonsense? Yahoo! announced that its much-hyped Panama upgrade would NOT be rolled out in the third quarter as initially promised. Instead, the long-awaited new interface for advertisers will debut in the hectic fourth quarter. Maybe.

Yahoo! Chief Executive Terry Semel:

“Given the complexity and importance of going to market with an application of this scale, it probably requires a little more time than we originally anticipated.”

Rather surprising since just two months ago, Yahoo! assured us they were still on track for a third quarter summer release. Yahoo! will take the additional time to continue testing its new platform, which is said to include improvements, such as the move to a quality-based ranking model, keyword grouping enhancements, IP-based mapping features, better scheduling capabilities, indirect conversion tracking and more.

The news of the delay, plus the announcement of unimpressive (but in line with predictions) second quarter earnings, are said to be responsible for the plummet Yahoo!’s stock took Wednesday. Within hours of the announcement, Yahoo! stock took a 20 percent NASDAQ nosedive, a new 52-week low for the media moguls. Probably not the kind of record breaking numbers they were looking to achieve today.

Others are speculating the delay will give Microsoft a chance to catch up to Yahoo! in the PPC game. I don’t put much validity in that one. Pushing things back a quarter won’t give Microsoft legs it wouldn’t have had otherwise, especially when Microsoft is having their own set of troubles.

And what about this quote from Stanford Financial Analyst Clayton Moran:

“The most interesting thing is that delaying improvements to Yahoo’s search adds to the book of evidence that other companies are not able to keep up with Google. Yahoo is saying we’re not there yet and all the while Google is gaining share and showing better results.”

Those are some strong words. I don’t think a delay shows a weakness in Yahoo! It’s a letdown to advertisers who have been waiting for what it supposed to be a very impressive Yahoo! release, but it’s no deal breaker. I also don’t think it’s fair to try and find a correlation between the Panama delay and Google showing (or not showing) better search results than Yahoo!

Hopefully Yahoo! will do its testing and release Panama early in the fourth quarter. We’ve heard rumors that if it goes too deep into the holiday season Yahoo! will delay even further, possibly even into the first quarter of 2007. No one wants to see that. Panama is Yahoo!’s best hope of catching Google in the sponsored search game. Advertisers are tired of waiting and even I’m excited to see what Yahoo! has in store for us. Me excited about a Yahoo! product? Crazy, right?

But before you start feeling sorry for Yahoo!, the press today wasn’t all bad. Yahoo! announced their partnership with Zillow. Yahoo! will welcome Zillow into its Real Estate section and will also offer Zillow Zestimates directly on Yahoo!’s SERP. This is far too exciting for me. I am a proud Zillow enthusiast, and if you haven’t given it a shot yet, you should. It’s addicting. This is a smart partnership for Yahoo! It helps them fill a hole in its Real Estate area and gives Zillow the exposure it wouldn’t have had otherwise. Most excellent.

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