Despite the shortfall, Yahoo!'s surging revenue indicates that both branded and search advertising continue to gain momentum, said Jeetil Patel, senior analyst at Deutsche Bank. "The numbers," he said, reinforce the "contined advertising strength of the industry."
Yahoo! also forecast that 2006 revenue will range between $4.6 billion and $4.85 billion, excluding commissions--but the midpoint of the guidance comes to slightly less than the $4.77 billion revenue estimate of analysts polled by Thomson Financial.
Yahoo! head Terry Semel also said that the company will lose about $120 million in revenue after its contract to sell search ads on Microsoft expires this year.
Still, Yahoo!'s forecast calls for an increase of at least 24 percent from 2005--which, alone, suggests healthy gains this year for both Yahoo! and the online ad industry, said Patel. "It certainly does still bode well for online ad market for '06," he said, adding: "It suggests the industry remains very vibrant."