Jonathan Swift, the 18th-century satirist whose hero Gulliver once recoiled at the sight of the execrable creatures known as “Yahoos”, might have approved of Japan’s rally. Streaking ahead are the workhorses of Japan Inc – Nissan Motor, up 93 per cent in the year to date, and Sharp, 72 per cent (never mind that both lost money last year) – and a brace of trading houses. Languishing at the bottom is Yahoo Japan, down 25 per cent and the worst performer on the Topix 100. This is curious. If consumers are in a mood to buy cars and televisions, surely they can hustle up some advertising. The listed internet firm, a third owned by Yahoo of the US and long one of its crown jewels, gets a lot else right. It generated $1.4bn of operating income last fiscal year, up 8 per cent year on year, and is guiding for this quarter a flattish to 4 per cent growth year on year. It also slashed 7 per cent of its costs in the fourth quarter.

The biggest risk, though, is advertising, which contributes more than half of revenues and operating income. Advertisers are clearly spending less: industry-wide sales in April were 15 per cent lower than during the same month last year, according to government data. Online ads are proving more resilient, down just 2 per cent at $120m, but display ads – reckoned to account for a third of Yahoo’s ad revenues – are expected to take a big hit this quarter. Another victim is the group’s jobs site, where revenues have fallen sharply. By lagging its less virtual peers, Yahoo Japan trades on an almost sane price of 25 times this year’s earnings, according to Bloomberg, a snip compared with most of its fellow dotcommers. Factor in operating margins of about 50 per cent, and the company’s pummelling at the hands of Japanese investors looks overdone – whatever Mr Swift might think.

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