To: 1podstock who wrote (93369 ) 7/10/2002 11:58:06 PM From: Softechie Respond to Yahoo! (YHOO) 12.72 +0.53: Yahoo! isn't the market-mover it used to be, but its Q2 earnings report and outlook have, at least, helped its own cause as evidenced by the 4% increase in its stock after hours. Several items have contributed to the buying interest, not the least of which was the fact that YHOO reported its first profitable quarter on a GAAP basis since 3Q00. Specifically, the company posted a profit of $0.03 per diluted share, a penny ahead of the consensus estimate, and versus a loss of $0.09 per diluted share in the yr-ago period. Net revenues increased 24% to $225.8 mln (Multex consensus $214.4 mln) and were at the upper end of the company's previously forecasted range of $205-225 mln. Marketing services revenues declined 4% to $135.7 mln, accounting for 60% of YHOO's total net revenues. However, that is down from 63% in Q1 and from 77% in the yr-ago period, which reflects the company's efforts at becoming less dependent on the cyclical advertising market. To that end, fees and listing revenues, aided by the HotJobs acquisition, surged 109% to $74.1 mln while its transactions business registered a 179% improvement in revenues to $16.0 mln. Looking ahead, YHOO is projecting Q3 revenues of $225-250 mln (consensus $231.8 mln) and full-year revenues between $900-940 mln (consensus $899.6 mln). EBITDA, meanwhile, is expected to be in the range of $38-48 mln for Q3 and $140-165 mln for FY02. Three months ago, YHOO said it anticipated FY02 revenues and EBITDA of $870-910 mln and $105-130 mln, respectively. All in all, YHOO had a good report that was punctuated by an acknowledgment that it ended 1H02 with over $100 mln in free cash flow, $1.466 bln in cash, cash equivalents, and marketable debt securities, and no outstanding debt. The CEO, in turn, claimed that the company is "...feeling really optimistic as we look ahead." It remains to be seen if investors will feel the same about YHOO beyond the knee-jerk reaction that typically follows its earnings reports. At its current price, YHOO trades at 116x est. FY02 earnings and 64x est. FY03 earnings. In Briefing.com's estimation, those multiples are too rich in this value-oriented market, particularly for a company like YHOO that is in the midst of re-working a distressed business model. (Disclosure: Briefing.com has a business relationship with Yahoo!)-- Patrick J. O'Hare, Briefing.com
