Yahoo's sales fail to inspire despite cuts in cost base

YAHOO disappointed Wall Street with sluggish revenues growth, in sharp contrast to the strong performance posted by Apple, writes Peter Ranscombe.

Cost cuts meant second-quarter earnings increased 51 per cent to $213 million (139.6m), but analysts said revenues growth of 2 per cent was disappointing given rival search engine firm Google last week announced a 24 per cent improvement over the same period.

Both Yahoo and Google make virtually all of their money from online advertising, a sector that has been recovering faster than other forms of marketing.

About 29 per cent of Yahoo's revenue comes from outside the United States, with Europe accounting for less than 9 per cent of the total.

Yahoo chief executive Carol Bartz said the firm's "top job" was growing revenue, and said that Yahoo continued to make progress adding video and social networking to its network of websites in order to make them more popular with web users.

She also said Yahoo's internet search deal with Microsoft, designed to save Yahoo hundreds of millions of dollars in annual expenses by shifting back-end web indexing chores to Microsoft, remains on track to go into effect before the end of the year.