Yahoo Warning Sinks Shares

The Internet company said Tuesday that online ad growth is slowing. Other Internet stocks dropped in sympathy

Investors dumped shares in Yahoo (YHOO) on Sept. 19 after the Sunnyvale, Calif.-based Internet company warned of slowing online advertising growth in recent weeks.

Noting weakness in revenue from auto and financial services advertising, Yahoo now expects its third-quarter revenues to be at the bottom half of its previously forecasted range, according to the Reuters report of a Goldman Sachs media conference on Sept. 19. On July 18, Yahoo had forecast third-quarter revenue of $1.12 billion to $1.23 billion excluding traffic acquisition costs, Reuters said.

Yahoo's stock price plunged 12% to $25.51 in Nasdaq trading at around 4:00 p.m. Eastern Daylight Time.

After the news, Standard & Poor's Corp. analyst David Kaplan reiterated his hold rating on Yahoo's stock. But he said in a research note that Yahoo and several other Internet companies, including Google (GOOG), eBay (EBAY) and Amazon (AMZN) are taking hits in the market "on concerns about a possible deceleration in internet advertising and spending." (S&P, like BusinessWeek.com, is owned by The McGraw-Hill Companies.)

Yahoo's rival Google sank in value by 2.9% to $402.84 per share on the The NASDAQ Global Select Market at around 4:00 p.m. Eastern Daylight Time. The online auctioneer eBay dropped 3.2% to $25.98 per share, while the retailer Amazon shed 1.6% to $31.58.

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