Suit Against Yahoo Alleges Defective Ad Technology

  |  May 15, 2007   |  Comments

Yahoo is the subject of a civil suit alleging "operational deficiencies" in the firm's ad-serving technology caused Yahoo to lose market share and push down its stock price

Yahoo is the subject of a civil suit alleging "operational deficiencies" in the firm's ad-serving technology caused Yahoo to lose market share and push down its stock price.

The complaint says "Yahoo’s stock rose precipitously on defendants’ positive statements concerning Yahoo’s sales growth, record reported revenues and earnings and strong business fundamentals" and the shares rose to over $43 per share on January 6, 2006.

"However, concealed from investors was the fact that due to operational deficiencies in its ad technology, Yahoo was rapidly losing market share to Google and other search engines and Web destinations that would significantly undermine its revenues, earnings and value," the suit by Lerach Coughlin Stoia Geller Rudman & Robbins LLP states. The firm is seeking class-action status on behalf of a wide class of shareholders.

On July 19, 2006, Yahoo's stock price fell 22 percent after the company announced second-quarter 2006 financial results that were lower than investors expected and analysts downgraded the shares, erasing billions of dollars in market capitalization, according to the suit.

The complaint presents a laundry list of Yahoo's alleged failings. Suits like these appeared by the hundreds after the dotcom bubble burst. Many companies agreed to settlements rather than go through the expense of a defense.

An e-mail to Yahoo's media relations staff seeking comment wasn't immediately returned.

ClickZ Live Chicago Join the Industry's Leading eCommerce & Direct Marketing Experts in Chicago
ClickZ Live Chicago (Nov 3-6) will deliver over 50 sessions across 4 days and 10 individual tracks, including Data-Driven Marketing, Social, Mobile, Display, Search and Email. Check out the full agenda and register by Friday, Oct 3 to take advantage of Early Bird Rates!

ABOUT THE AUTHOR

COMMENTSCommenting policy

comments powered by Disqus

ClickZ Today is our #1 newsletter.
Get a daily dose of digital marketing.

COMMENTS

UPCOMING EVENTS

Featured White Papers

IBM: Social Analytics - The Science Behind Social Media Marketing

IBM Social Analytics: The Science Behind Social Media Marketing
80% of internet users say they prefer to connect with brands via Facebook. 65% of social media users say they use it to learn more about brands, products and services. Learn about how to find more about customers' attitudes, preferences and buying habits from what they say on social media channels.

An Introduction to Marketing Attribution: Selecting the Right Model for Search, Display & Social Advertising

An Introduction to Marketing Attribution: Selecting the Right Model for Search, Display & Social Advertising
If you're considering implementing a marketing attribution model to measure and optimize your programs, this paper is a great introduction. It also includes real-life tips from marketers who have successfully implemented attribution in their organizations.

Jobs

    • Tier 1 Support Specialist
      Tier 1 Support Specialist (Agora Inc.) - BaltimoreThis position requires a highly motivated and multifaceted individual to contribute to and be...
    • Recent Grads: Customer Service Representative
      Recent Grads: Customer Service Representative (Agora Financial) - BaltimoreAgora Financial, one of the nation's largest independent publishers...
    • Managing Editor
      Managing Editor (Common Sense Publishing) - BaltimoreWE’RE HIRING: WE NEED AN AMAZING EDITOR TO POLISH WORLD-CLASS CONTENT   The Palm...