Sep00 10Q info.
Revenues
Net revenues were $295.5 million and $799.3 million for the three month and nine month periods ended September 30, 2000, respectively, which represent increases of 90% and 106% when compared with the corresponding periods in 1999.
Advertising Revenue. Of the total net revenues for the third quarter and the nine months ended September 30, 2000, advertising revenue was $265.9 million and $722.8 million, respectively, which represent increases of 89% and 105% when compared with the corresponding periods in 1999. The increase was due primarily to the increasing number of advertisers purchasing space on the Company's online media properties as well as larger and longer-term purchases by certain advertisers. Approximately 3,450 customers advertised on the Company's online media properties during the quarter ended September 30, 2000 as compared to approximately 3,200 during the third quarter of 1999. No single customer accounted for 10% or more of net revenues during the three and nine month periods ended September 30, 2000 and 1999
Business Services Revenue. Business services revenue consists of revenues generated from broadcasting live and on-demand audio and video events and subscription-based hosting services. Business services revenue comprised $29.7 million and $76.5 million of total net revenue for the third quarter and the nine months ended September 30, 2000, respectively, which represent increases of 95% and 110% when compared with the corresponding periods in 1999.
A key element of our strategy is to generate advertising revenues through sponsored services and placements by third parties in our online media properties in addition to banner advertising. We typically receive sponsorship fees or a portion of transaction revenues in return for minimum levels of user impressions to be provided by us. These arrangements expose us to potentially significant financial risks in the event our usage levels decrease, including the following:
• the fees we are entitled to receive may be adjusted downwards;
• we may be required to "make good" on our obligations by providing alternative services;
• the sponsors may not renew the agreements or may renew at lower rates; and
• the arrangements may not generate anticipated levels of shared transaction revenues, or sponsors may default on the payment commit- ments in such agreements as has occurred in the past.
These properties, such as Yahoo! Shopping, link users with a network of retailers with which we have relationships. However, we merely provide a means through which our users can access the sellers of the products such users may wish to purchase and do not establish a direct billing relationship with our users as a result of any such purchase. In addition, a large number of our users currently utilize our online shopping services simply to gather information for future offline purchases. We will need to effectively induce information gatherers to make purchases in order for our electronic commerce properties to be successful. Finally, the success of our electronic commerce properties will also depend on, among other things, our ability to attract and retain well-known brands among our network of retailers. The revenue that we derive from our electronic commerce services is typically in the form of a bounty or a commission paid by the retailer from whom our user purchased a product. If the user had a favorable buying experience with a particular retailer, the user may subsequently contact that retailer directly rather than through our service. If our users bypass our electronic commerce properties, such as Yahoo! Shopping, and contact retailers directly, we will not receive any revenue for purchases made through such direct contact.
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I have bought two items through yahoo shopping in the past month vs. none ever before. It seems to be better in locating objects for sales than using excite, altavista, etc. This yahoo-shopping may be a significant source of future revenue ans bears watching.
Also, we are seeing the competition thin out for yahoo as a search engine as competitions drops.
The question is whether the ad spending can continue. Ad spending currently still features typical web base propeties such as e-brokers and Wall Street Journal. Click throughs on banner ads are getting less and less. This model needs to change for yahoo to continue its 20% EPS growth for 2001 as forecasted by Zacks.
Is the present 16.5B marketcap and 84 P/E too high for a companies that is dominating a sector? Sure, if growth is only going to be 20%.
At $28 many see this as cheap relative to the high of $250. But if we take the 3/2, 2/1, 2/1, 2/1 splits, is a $336 price split unadjusted fair value?
Could you envision YHOO at $90 at this price or $9 split adjusted.
Now cash is a large 1.24B, but only $2.22 a share. There is no debt.
An 18 Price/Sales is another measure of the valuation. AOL number for P/E and P/S are a little lower.
Comparing both AOL and YHOO to the Nasdaq shows that both under perfomed it in late 1996. Then the internet bubble blew skyward. finance.yahoo.com
Saying all this means waiting to the conference call to see the future of ad revenues.
Jack |
