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Technology Stocks : Altaba Inc. (formerly Yahoo) -- Ignore unavailable to you. Want to Upgrade?

To: HG who wrote (21258)	4/8/1999 11:35:00 AM
From: Impristine	Read Replies (2) \| Respond to of 27307

LOL, how bout a rich hero?

To: HG who wrote (21258)	4/9/1999 9:08:00 AM
From: Glenn D. Rudolph	Read Replies (1) \| Respond to of 27307

Yahoo! – 8 April 1999 2 Note: The Yahoo!/Geocities merger should close in May. All of the metrics and analyses referenced in this note (aside from the comments on Geocities performance) concern the performance of Yahoo! as a stand-alone entity. The model and estimates included here, however, have been adjusted to account for the Geocities transaction. The Bottom Line. It would be difficult to ask for stronger fundamentals than Yahoo!'s. The company has grown from two graduate students with a PC in early 1995 to a global corporation with a run-rate of $350 million in revenue and $100 million of fully taxed profit--and this should be only the beginning. The stock's extreme valuation leaves it exposed to volatility, but Yahoo! is one of the three strongest companies in the Internet industry, and we think it could enjoy several years of 100%-plus earnings growth. The stock remains a core holding in our Internet portfolio. Quarter Highlights. The stand-alone Yahoo! had another great quarter. The stand-alone Geocities didn't (we are basically okay with this, though—please see below). The key metrics for tracking Yahoo's progress, in our opinion, are: revenue EPS operating margin pageviews registered users/overall users Quarterly revenue increased 181% year-over-year and 13% sequentially to $86 million. This compares to our estimate and consensus of $77 million and whisper numbers in the low-to-mid $80-million range. We imagine that a few investors might have been hoping for an even higher number, but we are plenty impressed with a 13% sequential increase from the strongest quarter of the year to the weakest (and we expect that the company has continued to gain market share). One note about the revenue composition: approximately 30% of revenue came from the company's premier merchants, about 5% more than last quarter. When this revenue is stripped out, the remaining revenue (which is mostly banner advertising) increased only 5% or so. The good news here is that the company's advertising inventory (pageviews) increased more than 40%—leaving the company plenty of room to grow when the seasonal strength in advertising returns. The total number of advertisers on the network decreased from 2,225 in Q4 to 2,125 in Q1, consistent with last-year's seasonality. The length of the average advertising contract remained about 145 days. We are raising our 1999 revenue estimate from $350 million to $440 million (which includes approximately $50 million in revenue from Geocities) and our 2000 estimate from $460 million to $610 million. We believe there is still upside to these estimates. Operating EPS of $0.11 beat consensus by $0.03, the 12th consecutive quarter in which EPS have beaten consensus by $0.02 or more. The most optimistic plausible whispers called for EPS of $0.11, making this the fourth quarter in a row that the company has met or beaten the highest sane whisper number. Most of the upside came from higher than expected revenue and operating leverage. EPS excluded the amortization of intangibles and one-time charges. We are raising our 1999 EPS estimate from $0.37 to $0.39 and our 2000 estimate from $0.48 to $0.54. We believe there is still upside to these estimates. The operating margin increased another 3 points sequentially to 38% (excluding amortization and other merger-related charges). The company gained leverage from higher than expected revenue (up 13% sequentially) and on-plan operating expenses (up 9% sequentially). We believe that at this stage of the game, Yahoo! should be doing everything possible to build the brand worldwide, and we expect that it will continue to invest. We also expect the company to continue to invest heavily in its technology platform, whether through direct expenses in R&D or through potentially dilutive acquisitions. We still see the potential for 40%-50% margins long-term (the company's stated target range remains 30%-36%), but as a result of dilution from the Geocities and Broadcast.com acquisitions, we expect margins to drop significantly over the next few quarters. Average daily pageviews increased 41% sequentially to 167 million--crushing our estimate of 205 million and nearly the fastest increase in the company's history. We have long viewed pageview growth as a leading indicator of revenue growth and were therefore a bit nervous to see pageview growth of only 16% last quarter. After this quarter, we aren't nervous anymore. The company attributed the strength to 1) growth in users, 2) growth in services, and 3) strength at the international properties. Registered users increased 34% sequentially to 47 million—and total monthly users increased from “more than 50 million” to “more than 60 million.” Registered users tend to be much more loyal than unregistered users— visiting the site more often and looking at more pageviews each time. As the company builds a larger and larger base of user profiles, it will also be able to improve its advertising and direct marketing targeting capabilities (which will translate into higher revenue per user). The company's “reach” numbers in the February remained among the highest on the Web: 53% among work-based users (ranking Yahoo! as the No. 1 site at work) and 48% among home-based users (ranking Yahoo! the No. 2 site at home). Combined reach of 48% made Yahoo! the No. 2 network of sites overall. Yahoo! continues to gain market share as measured by pageviews. $650 million in cash and short-term investments, no debt, and steadily improving DSO. DSO improved again, from 30 to 28 days. The cash-stash gives Yahoo! the flexibility to make acquisitions or investments, which we expect it will continue to. The company already has built an impressive “keiretsu” of investments in related Internet companies, many of which already have made it to the public markets. Yahoo! is now also generating approximately $30 million of cash flow per quarter.