YHOO--Yahoo! Touts Its Results in Bid to Reassure Investors
By Carolyn Koo
Staff Reporter
10/10/00 6:05 PM ET
Updated from 4:39 p.m. ET
Internet portal Yahoo! (YHOO:Nasdaq - news) exceeded Wall Street's earnings expectations by a penny, while racking up a 90% increase in revenue that indicates the online advertising market may yet have life.
For the third quarter, net earnings, excluding certain items, rose to $81 million, or 13 cents a share, from $38.5 million, or 6 cents a share, a year earlier. The consensus estimate of analysts polled by First Call/Thomson Financial was 12 cents. The results exclude a one-time charge related to acquisitions, as well as other items.
Revenue rose to $295.5 million from $155.9 million a year ago. The majority of Santa Clara, Calif.-based Yahoo!'s revenue is derived from advertisements. There had been fears that the company, a barometer of the Internet economy, would suffer from a slowdown in ad spending by beleaguered dot-coms. However, Yahoo! decisively beat the consensus revenue expectation of $280 million and the whisper number of $290 million.
In an effort to allay worries over the financial condition of its client advertisers and merchants, Yahoo! disclosed that pure-play Internet companies represented a high of 47% of its worldwide revenue base in the second quarter. That number decreased to just over 40% in the third quarter. At the same time, there was growth in advertising from "more traditional" marketers, the company said in a conference call.
"Financially questionable" companies still account for less than 10% of revenue, but that number has gone down since the second quarter. Yahoo! declined to provide more specifics.
The news sent shares of Yahoo! up initially in after-hours trading, but they then began to fall, trading recently at about $77 each, according to Island. They finished regular trading at Tuesday at $82.69.
"If Yahoo! had missed its numbers, there would have been turmoil in the sector," said Yusuf Haque, an analyst at 123Jump.com, an independent research house that doesn't rate stocks or participate in underwriting. "I was pleasantly surprised."
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