Probe into Yahoo, Pulling Down 10% of Stock Price

Next is Yahoo’s turn, following AOL?

The corporate accounting scandal is spilling into the world’s largest Internet company Yahoo!. The rumor has it that the US Securities Exchange Commission might conduct a probe into Yahoo’s accounting practices following that into AOL Time Warner. In response, the Bloomburg reported, Yahoo’s stock price plummeted by more than 10% on July 25th.

Yahoo closed at $12.16 a share, or 10.46% ($1.42) lower than the previous day. During the day, it once plunged down to $11.91.

The analysts on the Wall Street and investors worry Yahoo may have adopted an accounting practice, regarding its sales from advertising, which threw the AOL Time Warner deep down into the SEC’s investigation. Through Internet advertising, Yahoo earned 60% of its income (i.e. $225,800,000) in the second quarter of this year. One analyst commented, “In connection with the probe into the AOL, people believe, something will happen to Yahoo.”

Paul Cook, manager of technical investment at a mutual fund, said, “The rumor that the Forbes, a biweekly, will run a negative article about Yahoo! next week made the case worse for Yahoo on the market.”

Investors worry that the Internet advertising market may shrink partly due to the lowered profit predictions for the AOL and Cnet Network. One analyst at the Investech classified Yahoo’s stocks for selling.

Yahoo’s spokesperson Christine Castro denied, “I do not know of any SEC’ investigation.” In the meanwhile, spokespersons for the SEC and the Forbes avoided commenting.

Previously, the Washington Post reported that the AOL Time Warner bloated the advertising sale regarding its core Internet-company “American Online” through window dressing.

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