Internet search company Yahoo Inc. has reported an 11 per cent fall in quarterly profits sparking a drop in value of 7 per cent in the company's shares.
Yahoo forecast second-quarter revenue, excluding payments to affiliates, of $1.2 billion to $1.3 billion, slightly below analysts' forecasts ranging from $1.22 billion to $1.35 billion.
Investors expressed concern Yahoo was unlikely to close a growing market share gap in Web search with leader Google Inc in the near future.
Stifel Nicolaus analyst Scott Devitt said it looked like the impact from Yahoo's new Web advertising system, dubbed Panama, has been slower to materialise than investors hoped.
"It looks like they lowered the second quarter (forecast) a little bit," he added. "We would be buying Google on these results. I think it's a market share issue, not a sector issue."
Citigroup analyst Mark Mahaney said in a report ahead of the results that Yahoo's share of the US Web search audience had continued to slip to 27.5 per cent of the market, while Google posted fresh gains, to 48.3 per cent, based on comScore data.
Yahoo said first-quarter net income fell to $142 million, or 10 cents per diluted share, compared with the year-earlier quarter of $160 million, or 11 cents per diluted share.