Declining ad sales in the finance and automotive markets, a delayed launch of a new contextual ad service, and splashy acquisitions by Google have left Yahoo feeling like the last grape in a wine press.
would be delayed until 2007, Yahoo's stock price plunged from 32.24 to 25.20 per share. Yesterday it closed at 24.12.
Seeking Alpha even said Yahoo is under pressure to spend a billion dollars on Facebook, so that makes it true, doesn't it?
"We think Yahoo is being out-executed by Google in terms of innovation, financials and partnerships/acquisitions," Scott Kessler, an analyst with S&P's Equity Research Services, wrote in a note to clients on Tuesday.
"With its shares close to their 52-week low, we believe the pressure is significant for Yahoo to do something meaningful to garner positive interest and restore investor confidence," he said.
Whether or not Yahoo investors would see a $1 billion price tag for a social networking site with nine to ten million members as restoring their confidence is a question only the market can answer. It's easy to imagine Yahoo could duplicate Facebook's functionality, and that many of Facebook's members are Yahoo users already.
Even if they made this deal, someone still has to pay Microsoft a breakup fee, as it currently provides ads on Facebook under a contractual agreement.
While being second in search has not bolstered Yahoo's fortunes, the company still has a few billion dollars in cash and continues to make branded advertising deals. At press time, the ad running on Yahoo's home page in premium, above the fold placement, is an advertisement for Chrysler.
Auto and finance ad sales may be soft, but Yahoo brings them in anyway. Maybe that is cause for positive interest in Yahoo.
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David Utter is a staff writer for Murdok covering technology and business. 
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