They really got clobbered after hours. Down 12%. I think missing the numbers slightly was bad but I think this may be worse:
Chief Financial Officer Susan Decker cautioned that during 2006 the company faced a smaller contribution from its Chinese business, rising traffic acquisition costs and the loss of its highly profitable business selling ads for Microsoft. Gross margins will decrease to 40 percent during the first quarter, she said.
Rising costs plus losing a big client will make for some tough times going forward. I wonder if the loss in value will bring MSFT to the deal making table. A Microsoft buyout of Yahoo would really make a splash I think.
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