Will Display Ad Slowdown Crimp Yahoo and AOL?

Earlier today, Valueclick (VCLK) warned that results for the second quarter as well as the rest of the year will be below previous expectations, putting at least part of the blame on a slowdown in online display advertising. That raises some serious questions for other companies with significant exposure to online display ads, in particular Yahoo (YHOO) and Time Warner’s (TWX) AOL unit.

Youssef Squali, an analyst at Jefferies & Co., this morning said that checks indicate that the top ad categories in Yahoo’s display segment are under pressure, and will likely cause second-quarter results to come in at the low end of expectations. Squali, who notes that the display business accounts for about 40 percent of Yahoo’s revenues, says there are indications of weakening ad spending in autos, financial services and consumer packaged goods.

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