Momentum Deserts Yahoo!

Updated from 7:31 a.m. EDT

Yahoo! (YHOO Quote) shares tumbled early Wednesday after the Net giant disappointed investors yet again.

The Sunnyvale, Calif., company beat so-called adjusted profit targets and offered guidance that was in line with Wall Street targets. But shares slipped more than 11% to $28.41 in early Wednesday trading, giving back roughly half of this year's gains as investors mulled over a weak revenue performance.

CEO Terry Semel also warned of reduced expectations in the Net giant's key display advertising business.

Back in January, on the company's fourth-quarter earnings call, Semel promised that Yahoo! intended to "outpace the industry" in 2007 on display-ad growth. But on Tuesday, Semel said the company expects merely to keep pace with rivals.

Though the new guidance would mark a scaling back of "only couple of hundred basis points," Yahoo! CFO Sue Decker said in an interview, the shift marks yet another black eye for Yahoo!, which disappointed Wall Street serially last year, earning its shares a nearly 40% drop.

Decker said that Semel's comments would put Yahoo!'s forecast more in line with what it had previously put out after the third quarter of 2006.

Jefferies cut its price target to $36 from $38, saying the quarter "leaves something to be desired."