Yahoo Looks to The Future Despite Big Losses

Yahoo’s pledge to cut 1,000 jobs is the latest move for a company beset by financial problems to improve its position as it seeks to combat Google and Microsoft in the market for online advertising.

As expected, the company announced the cuts during its fourth-quarter conference call Jan. 29. News of the pink slips, which will be made incrementally, rode shotgun to a 23 percent drop in fourth-quarter profit from the same period last year.

That was a good sight worse than the 5 percent year-over-year slip for the third quarter. The evidence suggests Yahoo could be reaching its nadir.

Over the past several months, financial and industry analysts have heatedly debated Yahoo’s destiny. Should the company sell to Microsoft, or refocus on its core search strengths, while livening its massive Yahoo Mail community with social networking tools?

In short, should Yahoo stay or go?

Yahoo CEO Jerry Yang, who took the helm in June to help get the company back on track, said the cost-cutting measures would help the company emerge from 2008 “stronger and more competitive.”

The jobs cuts and Yang’s talk about getting through 2008 stronger signals the company isn’t going down without a fight. But this is a tough fight; Google and Microsoft are growing stronger in online ads.

When Google announces earnings Jan. 31, it is expected to report a 40 percent profit jump and a 54 percent jump in revenues for the fourth quarter. Where search-driven ad sales are concerned, Google’s dominance shows no sign of slackening.

While third behind Google and Yahoo in search market share, Microsoft is inking more high-profile ad deals than it has in years, likely thanks to the technology it acquired when it purchased aQuantive.

Today, the company won the right to be the exclusive third-party provider of contextual and paid search advertising for The Wall Street Journal Digital Network, which boasts a global audience of more than 20 million unique monthly visitors.

In the face of such opposition, Yahoo battles on, and is making preparations for the next big online ad war: mobile. Yahoo, Google and Microsoft are all positioning themselves to let advertisers deliver more targeted messaging to Web users through their mobile devices, such as smartphones.

Yahoo took strong steps Jan. 7 at CES when it launched its Mobile Developer Network, which will let programmers write to Yahoo’s mobile software platform.

Just as important, Yahoo is striking its share of ad deals, too. Today, the company replaced a six-year deal with AT&T, agreeing to provide search and display advertising for AT&T consumers on mobile devices and PCs.

That pact follows the Jan. 17 alliance with T-Mobile in which Yahoo will provide the first graphical advertising for T-Mobile’s Web-n-walk mobile Web service.

Yang’s message today stressed “stronger and more competitive.” For better or worse, even as its stock and coffers take a beating, Yahoo isn’t backing down from Google and Microsoft.