What Yahoo Q3 Means For Google, Economy, et al

Yahoo's Q3 results (SAI analysis here) contained good news for more than Yahoo.  Despite anecdotal reports of weakness in display advertising through the quarter (News Corp's FIM, AOL), the company did not appear to be affected by troubles in the mortgage and finance industry.  This suggests that such troubles are not yet spreading to other sectors.

Yahoo's CFO Blake Jorgenson said the company is "conscious" of concerns about the economy--which is probably one reason Yahoo's guidance for Q4 is light--but has not seen troubles in any particular sector.  This is not a rip-roaring clean bill of economy health, but it's not gloom and doom, either. 

Meanwhile, Valueclick's (VCLK) minor revenue shortfall in Q3 appears to be the result of scrutiny around a small segment of the ad market--lead-gen--rather than a broader economic problem.  ValueClick could be full of it, but we figure that, given the choice, the company would rather blame the economy than one of its business lines.

Search advertising is likely more insulated from economic malaise than display advertising, so Google's Q3 should be, as predicted, strong.  The macro environment for smaller players like CNET should be fine: It will be interesting to hear whether Yahoo's comments that CPMs were up year-over-year hold true for smaller sites as well.

We're not out of the recession woods yet, but Yahoo's comments were encouraging.

See Also:
Analyzing Yahoo's Q3: Better Than Expected
Internet Recession Watch: