Yahoo results won't surprise anyone
At least they shouldn't after 2 warnings
By Jennifer Waters, CBS.MarketWatch.com
Last Update: 5:50 PM ET Apr 7, 2001
CHICAGO (CBS.MW) - Yahoo is the envy of every portal and portal-wannabe, with a coveted 185-plus million users worldwide. But its sales are dwindling quickly, it has no profits and it can't even craft a guess on financial results for the rest of the year.
Heck, it doesn't even have a chief executive.
But the good news is that there should be no bolts from the blue on Wednesday, when the runaway Internet ruler releases its first-quarter earnings results after the close of trading. It helps, of course, that Yahoo (YHOO: news, msgs, alerts) cautioned investors twice in two months that the revenue faucet was running dry.
Its last red flag went up March 7, when Santa Clara, Calif.-based concern broke the news that profits would likely be nonexistent for the quarter.
Some call that break-even. Investors called it quits, unleashing another 20 percent plunge immediately to drag Yahoo down a mind-boggling 76 percent from its high to low in this year alone.
"The first-quarter results are unlikely to have many surprises and full-year expectations appear low enough to suggest that there is not another shoe to drop," Lehman Bros. analyst Holly Becker surmised.
Whew! The First Call/Thomson Financial consensus of analysts' estimates is, of course, zero profits for the first quarter and 6 cents for the year.
Most believe full-year revenue will fall in the $700 million to $900 million range, what represents as much as a 37 percent plunge from the same period last year. For the quarter, revenue estimates are anticipated to reach $170 million.
Becker, who believes Yahoo's full-year numbers will come in on the lower end of that, attributes the drop to the general malaise plaguing all dot-com sites: declining revenues from advertisers and electronic commerce partners. In fact, she estimates that the numbers reflect an eye-popping 79 percent slide in those revenues alone.
In her much-lauded report last week that gave shares of Yahoo a needy lift -- though it proved more psychological than anything else so far -- Becker upgraded the stock to a "buy" from "market performer" with the premise, "It's time to jump in!"
"It appears that the second quarter could represent the trough for Yahoo's earnings based on seasonality and 2000 comparison," she said. "Second half 2001 expectations no longer discount any miraculous recovery in the advertising market or on Yahoo's part, which gives us further confidence that the worst is over."
In other words, at $14.81, Yahoo's closing price on Friday, the shares have finally reached a valuation that is considered much more reasonable.
Needless to say, it would be a big surprise if Yahoo announces a new chief executive Wednesday, though few doubt that will be the case. The search is said to be ongoing, with at least five contenders.
Top dog aside, probably the most anticipated news out of Yahoo this week will be an outlook, even a nugget, on the rest of the year's financials.
On last month's conference call, Yahoo executives promised amid a throng of anxious analysts that they would be able to give some guidance on earnings for the rest of the year. If that's true, Yahoo may be the only technology-related company to do that this earnings season.
Jennifer Waters is a reporter for CBS.MarketWatch.com. |
