Yahoo Cuts 2001 Profit, Sales Forecast; Shares Fall
from Bloomberg
By Adam Steinhauer
Santa Clara, California, Jan. 10 (Bloomberg) -- Yahoo! Inc., owner of the most-used Web site for searching the Internet, said profit and sales this year will be lower than analyst forecasts, citing ``an expectation of slower advertising expenditures.''
Yahoo shares fell as much as 23 percent in after-hours trading. The Santa Clara, California-based company also reported a fourth-quarter loss after writing down the value of some investments.
The company said it expects revenue of $1.2 billion to $1.3 billion in 2001, less than the average analyst estimate of $1.42 billion from First Call/Thomson Financial. First-quarter revenue is expected to be about $220 million to $240 million, less than the average estimate of $303.6 million and possibly below the $228.4 million that Yahoo reported in the first quarter of 2000.
``The company's guidance was bleak,'' said Wit Soundview analyst Jordan Rohan. ``It was dismal. The company identified the second half of 2001 as a time they might rebound. We have no sense it'll rebound.''
Rohan said he expects Yahoo's sales to be closer to $1 billion to $1.1 billion.
The fourth-quarter loss was $97.8 million, or 17 cents a share, compared with net income of $37.8 million, or 6 cents, a year earlier. The loss included a write-down of $163.2 million in the value of investments. Those include shares of Internet phone company Net2Phone Inc. and other Web and technology stocks that Yahoo owns, executives said.
Revenue rose 53 percent to $310.9 million from $203.1 million. Before acquisition-related charges, amortization, stock-option taxes and investment losses, profit was $80.2 million, or 13 cents a share, matching analyst forecasts.
Advertising Sales
Yahoo shares have plunged 86 percent over the past year through today's close as sales of advertising on its Web pages has slowed.
The company said it expects to earn 4 cents to 7 cents a share in the first quarter and 33 cents to 43 cents for the year. Both forecasts are lower than analyst estimates.
Yahoo also cited a ``changing customer mix'' and ``current general economic conditions'' for the lower forecast.
Internet companies, which accounted for nearly half of Yahoo's advertisers early last year now account for about a third, Chairman and Chief Executive Timothy Koogle said in an interview.
Dot-Com Bust
The dot-coms' soaring stock prices made it easy for them to raise cash and spend heavily on advertising in 1999 and early 2000, analysts and investors said. Now, Internet shares have crashed and many Internet companies are low on cash.
``No one realized the magnitude of the free dollar and how much of that Yahoo grabbed last year,'' said Dan Chung, a portfolio manager with Fred Alger Management in New York. ``They grabbed a huge amount of dot-com spending. Basically, it says what we've seen for the last year and a half is hyper-growth from drunken spending by dot-coms.''
Koogle said the slower U.S. economy and declining financial markets could help Yahoo increase its market share as smaller competitors struggle.
``We have aggressively pushed forward to take market share with the largest advertisers as well as business-service customers,'' Koogle said.
Yahoo's forecast of sales and profit assumes financial markets will improve in the first half of the year, he said.
Subscription Services
Koogle said he also expects to start more ``subscription- based'' services on Yahoo.com to diversify its sources of revenue and make the company less dependent on advertising. Those services could include new personal-finance services and entertainment offerings, he said.
The number of users who logged on to Yahoo rose 50 percent to 180 million in December from 120 million in December 1999, the company said.
Yahoo also is trying to boost revenue from business services, such as hosting online shops for retailers, broadcasting corporate events and customizing businesses' internal Web sites.
Shares of other Internet companies fell in after-hours trading. EBay Inc., the biggest online auction site, fell as much as 12 percent to $34.75. Internet investor CMGI Inc. fell 15 percent to as low as $4. Online advertising services company DoubleClick Inc. fell as much as 18 percent to $10.19. DoubleClick is scheduled to report earnings tomorrow.
Yahoo is ``the bellwether of the Internet sector,'' said Alan Skrainka, chief market strategist for Edward Jones & Co. ``So, the thinking is that if Yahoo is going to fall short, then others are going to fall short as well.''
Best Regards, J.T. |
