July 9, 1998
Yahoo! Results Beat Estimates;
Company Announces Stock Split
By GEORGE ANDERS
Staff Reporter of THE WALL STREET JOURNAL
Yahoo! Inc. posted stronger-than-expected second-quarter results, as revenue
from advertising and business alliances surged at the Internet-directory
company.
Yahoo also said that it will split its stock 2 for 1, effective Aug. 3, and that it
plans to raise $250 million in a private equity placement. The private equity,
totaling nearly 1.4 million shares, will be sold to the U.S. affiliate of Yahoo's
largest current shareholder, Japan's Softbank Corp., to help finance future
acquisitions.
Yahoo's results, which were announced after the
close of trading, are likely to be seen as bullish
for the volatile Internet stock group. In the past
month, many Internet-related stocks have soared
50% or more, only to give back part of those
gains this week.
For the second quarter, Yahoo earned $8.1
million, or 15 cents a diluted share, before
one-time charges, compared with a $300,000
loss before charges a year earlier. Revenue nearly tripled to $41.2 million
from $14.1 million. Charges related to the acquisition of Viaweb Inc. in June
left Yahoo with a net loss of $36 million for this year's second quarter.
Results Beat Expectations
Analysts had expected Yahoo to earn nine cents a share before charges in the
second quarter, according to First Call, on revenue of about $35 million.
Yahoo's stock bounced around Wednesday before the earnings announcement,
but soared in after-hours trading. Yahoo shares fell $4.8125 to close at
$186.3125 on the Nasdaq Stock Market, but raced ahead in after-hours trading
to $198, according to Instinet Inc.
"The company is doing a great job," said Andrea Williams, a stock analyst at
Volpe Brown Whelan & Co., San Francisco. She noted that Yahoo has been
able to nudge up the price it charges advertisers for every 1,000 visitors to
various Web pages, as the Internet company becomes more adept at
segmenting its users and delivering target audiences that meet advertisers'
preferences.
Tim Koogle, Yahoo's chief executive officer, said rates paid by the 1,800
advertisers on the company's Web pages were "really firm" in the latest
quarter, averaging nearly $25 per 1,000 people viewing those pages. For
some premium locations, such as overseas services and financially oriented
pages, Yahoo is able to charge as much as $55 to $70 per 1,000 viewers, he
said. At the start of 1998, average rates had been $22 or $23, analysts
estimate.
Increase in Web Traffic
Yahoo said that its June traffic totaled 115 million page views a day, up from
95 million in March. Mr. Koogle also said that Yahoo in the latest quarter got
26% of its revenue from longer-term tie-ins with merchants running on-line
stores. That was up four percentage points from the previous quarter.
Yahoo declined to comment on speculation that it wants to acquire Source
Media Inc., a Dallas-based maker of software that enables television viewers
to use the Internet. Mr. Koogle did say that "we want to be opportunistic
about acquisitions." Source Media shares surged $2.6875, or 14%, to $21.375
in Nasdaq trading Wednesday.
The sale of shares to Softbank will increase Yahoo's ability to make
acquisitions for stock or cash, Mr. Koogle said. As of June 30, Yahoo had
$147 million in cash on its books.
At Wednesday's Nasdaq close, Yahoo has a market capitalization of $8.3
billion. While that valuation has led many short sellers to borrow stock and
bet on a stock-price slump, Yahoo continues to have an enthusiastic following
among individual investors, many of whom follow the company avidly on
Internet bulletin boards.
Those investors are likely to see Yahoo's pending stock split as bullish, says
Keith Benjamin, an analyst at BancAmerica Robertson Stephens, San
Francisco. Classic corporate-finance theory says splits shouldn't affect a
company's subsequent trading strength. But, Mr. Benjamin notes, it
"psychologically seems to help" investors in Internet stocks. |
