Phil, here are some more information form the 10Q:
>>Advertising purchases by SOFTBANK, a 30% shareholder of the Company at September 30, 1998, and its related companies accounted for approximately 8% and 4% of net revenues in the three and nine month
periods ended September 30, 1998 as compared to 4% and 5% in the corresponding periods in fiscal 1997. Contracted prices on these orders are comparable to those given to other major customers of the Company. There can be no assurance that customers will continue to purchase advertising on the Company's Web pages, that advertisers will not make smaller and shorter term purchases, or that market prices for Web-based advertising will not decrease due to competitive or other factors. Additionally, while the Company had experienced strong revenue growth during the first three quarters of 1998, management does not believe that this level of revenue growth will be sustained in future periods.<<
>>the Company expects its effective tax rate, before the effect of the non-deductible charge of $44,100,000 for acquired in-process research and development, will approximate 25% for fiscal year 1998. Before the effect of this charge, the tax rate was approximately 25% for the
quarter and nine months ended September 30, 1998. This rate is lower than the statutory U.S. federal rate due primarily to the utilization of net operating loss carryforwards<<
Keep in mind these will disappear and the effective tax rate will increase. A negative impact on future growth.
>>- our ability to continue to develop and extend the Yahoo! brand; - our ability to develop new media properties; - our ability to maintain and increase the levels of traffic on Yahoo! properties; - our development or acquisition of services or products equal or superior to those of our competitors; - the adoption by the market of the Web as an advertising medium; - the successful sale of Web-based advertising by our internal sales force; - relative price stability for Web-based advertising, despite competition and other factors that could reduce market prices for advertising; - our ability to effectively generate revenues through sponsored services and placements in Yahoo! properties;
- our ability to effectively integrate the technology and operations of businesses or technologies we have acquired; - our ability to successfully develop and offer personalized Web-based services, such as e-mail services, to consumers without errors or interruptions in service; and - our ability to continue to identify, attract, retain and motivate qualified personnel.
We may not be successful in implementing our growth plan.<<
Typical warnings, but one which appears to go unheeded.
>>In addition, we believe that period-to-period comparisons of our operating results are not meaningful. You should not rely on the results for any period as an indication of future performance. In particular, although we experienced strong revenue growth during the first nine months of 1998, we do not believe that this level of revenue growth will be sustained in future periods. We currently expect that our operating expenses will continue to increase
significantly as we expand our sales and marketing operations, continue to develop and extend the Yahoo! brand, fund greater levels of product development, develop and commercialize additional media properties, and acquire complementary businesses and technologies. As a result, we may experience significant losses on a quarterly and annual basis.<<
Read the above carefully. Growth WILL NOT continue at recent levels. But the price of the stock appears to ignor this fact.
>>As a strategic response to changes in the competitive environment, we may from time to time make certain pricing, service or marketing decisions that may adversely affect our profitability in a given quarterly or annual period.<<
Yahoo appears to be concerned about competition, but not their shareholders.
>>Our advertising revenue is subject to seasonal fluctuations. Historically, advertisers have spent less in the first and third calendar quarters. The level of use of our online properties is also seasonal. User traffic on Yahoo! online media properties
has historically been lower during the summer and during year-end vacation and holiday periods.<<
Expect the quarter we are currently finishing up to be a good one, but next quarter??
>>The market for Internet products and services is highly competitive. There are no substantial barriers to entry in these markets, and we expect that competition will continue to intensify. Negative competitive developments could have a material adverse effect on our business and on the trading price of our stock.<<
More about competition. And notice what they say about barriers to entry.
>>COMPETITION FOR ADVERTISING EXPENDITURES. We compete with online services, other website operators and advertising networks, as well as traditional offline media such as television, radio and print for a share of advertisers' total advertising budgets. We believe that the number of companies selling Web-based advertising and the available
inventory of advertising space has recently increased substantially. Accordingly, we may face increased pricing pressure for the sale of advertisements, which could reduce our advertising revenues. In addition, our sales may be adversely affected to the extent that our competitors offer superior advertising services that better target users or provide better reporting of advertising results.<<
Possible pressure on advertising revenues.
Enough now. If you haven't read this document, you should. It raises many of the issues I have in greater detail. They could work all the issues out, but if they slip anywhere, just what do you think the expectations are of those buying or holding shares at $200+?
Here's the link: sec.yahoo.com
Dave
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