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Yahoo Loses $11.5 Million, Future In Pornography
LOS ANGELES, April 11 (News Agencies) - The cutthroat fight for economic survival in the struggling Internet marketplace has lead online search engine Yahoo! to embrace the porn industry, the first major net company to do so, a report said Wednesday.
The move has made Yahoo a giant in the online porn industry, one of the few sectors of the Web that is actually profitable, the Los Angeles Times reported.
The company, based in Santa Clara, California, near San Francisco, has opened an online store stocked with adult videos and hard-core DVDs, the Times said.
"In the online sex market, size does matter," Dan Lavin of high-tech market analysis firm International Venture Research, told the paper. "There's no one bigger than Yahoo."
Other major, mainstream online firms have been reluctant to associate themselves with pornography.
Yahoo's decision to play a role as a porn online middleman reflects Internet companies' desperation amid an economic slowdown that has hit the Dot.com sector hard, the Times said.
On Wednesday Yahoo said it posted a net loss for the first quarter of $11.5 million compared with a profit of $67.6 million in the same period a year ago.
The company said it would cut jobs and make other changes in response to economic conditions.
Excluding one-time charges, the Internet portal earned a profit of $7.6 million, or one cent per share in the three months to March 31, compared with a $60.5 million profit a year earlier. Analysts had expected a break-even figure on a per-share basis.
Revenues amounted to $180.2 million from $230.8 million a year earlier, in line with forecasts.
The company has been struggling with a slowing economy and a battering of the dot-com sector that has caused a slump in online advertising.
Several key executives have left, and on Wednesday the firm said Heather Killen, senior vice president of international operations, was expected to leave the company in mid-June
Yahoo said it would cut about 12% of its workforce of 3,510 to cope with the slowing economy and take other measures, including discontinuing some services, to cut costs.
"The principle that guided our decisions was the determination of where we needed to invest to take advantage of future opportunities and ensure that we deliver long-term value to consumers, customers, employees and stockholders without compromising the quality of our service," said chairman Tim Koogle, who is stepping down as chief executive.
"We made some decisions that were difficult, but which ultimately balance the investment in our growth areas with the adjustments to our near-term business plan to better position Yahoo for long-term growth."
Yahoo expects a second-quarter charge of $40-$60 million for restructuring.
Some 185 million people worldwide access Yahoo each month.
Web surfers have always been able to find adult-oriented material on Yahoo, Excite and other mainstream Web portals. But Yahoo's move transforms it into a promoter - rather than just an indexer - of the racy products, the paper said.
Yahoo refused to comment to the Times.
But analysts said the company's porn gamble could backfire by alienating advertisers, its main source of revenue.
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