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Yahoo! CEO: Usage Up "Dramatically"

In a presentation marked by the liberal use of the words "rapid" and "growth," Yahoo! CEO Terry Semel told investors that users and usage of the portal's services had grown "dramatically" over the past year, and the company in December reached its goal of attracting 2 million paid subscribers by year's end.

Speaking at the Morgan Stanley Software, Services, Internet, and Networking Conference in Scottsdale, Ariz., Semel said usage of Yahoo! had grown 15 percent over the past six months, with the company having attracted 200 million unique users. It also counts nearly 100 million registered active users -- people registered with the portal that use at least five different Yahoo! services. The ranks of those folks, Semel said, had grown "very dramatically."

Much of that growth, according to Semel, comes at the expense of online competitors and traditional media. While some of this can be attributed to the growth in usage of the Internet as a whole, it's also likely due to the much-publicized troubles of competitor, AOL . That means the growth rates may be difficult to maintain if the ISP is successful in its turnaround effort. Semel, not surprisingly, is optimistic, predicting that Yahoo!'s market share will continue to increase.

"We're very excited about that increase," he said, "because the more time they spend with us the more opportunities we have to talk to them -- both Yahoo! opportunities in products and services, as well as those of our advertisers."

The remarks presage Yahoo!'s reporting of fourth quarter results next week. Back when it released 3Q results, Yahoo! execs predicted it would bring in between $930 and $955 million for the full year 2002, with EBIDTA coming in at between $190 and $200 million. Semel said he expected 22 percent overall revenue growth in 2002, and 20 percent growth, or more, in 2003.

Semel declined to go into detail about the company's most dramatic move in recent weeks, the acquisition of search player Inktomi for $235 million. Semel did say, somewhat cryptically, that owning the algorithmic search technology would allow Yahoo! to be more innovative and creative about the search-related services it will provide.

"We can create things that work for the size and the scale of what we are," he said. "And some of our inventions, and some of our innovations, will take advantage of what Yahoo! is, and be scaled specifically for our size and our scale."

Semel also reiterated the company's commitment to paid search, including paid inclusion listings, and noted that the Inktomi acquisition also brought Yahoo! a sales force accustomed to making paid search sales. Those salespeople, Semel said, would be focused on attracting small- and medium-sized businesses, and their sales pitches would be enhanced by the fact that Yahoo! generates better-than-average click-throughs in the paid search arena.

Bigger brand advertisers, however, are still very much a part of the Yahoo! strategy, and Semel stressed the company's commitment to working with advertising agencies -- an area in which the company was once very weak, but in which it has made great strides.

"We only had one kind of relationship with advertising agencies -- it was called nonexistent," he said, adding that the company has since made an effort to hire executives who have experience working with agencies.

Yahoo!'s newest line of business, fees and listings, also drew praise from Semel, as he patted the company on the back for having started from scratch and grown the business to serve 2 million paying subscribers in 2002. Semel has high hopes for the area, too, saying he expects to grow that number to 10 million in the next few years.

Yahoo! is set to unveil its results next week after Wednesday's market close.