Yahoo Profits High, Yet Stocks Slip.

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Yahoo released their Q4 2005 earnings report yesterday, reporting a 39% increase in revenue over the same period in 2004. But Yahoo failed to meet Wall Street projections, and predicted lower than expected revenue growth for 2006, causing their stock price to fall almost 13% to $34.96. Search advertising, is one of the fastest growing forms of advertising on the internet, and Yahoo is facing competition from industry leader Google, and newcomer MSN.

In an interview with MarketWatch’s Bambi Francisco, Yahoo CFO Sue Decker said that Yahoo’s failure to meet revenue expectations wasn’t due to a loss in market share, but less-efficient search traffic monetization. Also, profits from Yahoo’s partnership with MSN are expected to fall to $ 25 million by the end of 2006, down from $75 million in 2005 as MSN displays fewer Yahoo search ads and transitions to their own search advertising technology.

Over the course of 2006, Yahoo says they will gradually deploy better search monetization technology, and attract more publishers. They also have yet to fully integrate the social networking services they have purchased. Some notable acquisitions for Yahoo in 2005 included the photo sharing service Flickr, and the social bookmarking service del.icio.us.

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