Investors Look For A Sign From Yahoo

Investors will find out two things for sure when the closing trading bell sounds on Wednesday.

The first will be whether the stock market can turn in its third consecutive day of gains, and fourth in the last five. The second will be whether Internet bellwether Yahoo’s first-quarter earnings meet the company’s lowered estimates.

However, the real information that the market craves — a sign that the worst of the slump in online advertising revenue is over — probably won’t be so readily available. Investors will be looking to Yahoo for some guidance regarding the rest of 2001, but officials at the search and portal leader declined to offer any forecasts going forward when issuing its Q1 warning last month, and aren’t likely to do so now.

Instead, expect Yahoo to reaffirm its commitment to at least breaking even for the year — which could be accompanied by an announcement of layoffs — and to emphasize its efforts to broaden its revenue base beyond online advertising. The company also should provide an update on its search for a successor to CEO Tim Koogle, who announced in March that he was stepping down from that post, while remaining as chairman.

Yahoo has lowered its Q1 revenue estimates to $170 million to $180 million, down from both analysts’ forecasts of $233 million and last year’s first-quarter sales of $231 million. The company also bumped down its estimates for the bottom line to break-even from earlier Q1 projections of a 5 cents per share net profit. YHOO had a net profit of 13 cents per share in Q1 2000.

YHOO shares gained 2.4% to $16.02 Tuesday, though it needed a rally in the last half-hour of trading to end above water. Just a week ago, YHOO hit a 52-week low of $11.38.

Did You Notice The ‘Critical’ Part?

Investors pushed shares of e-mail software maker Critical Path up 3 cents, or 3.6%, to 87 cents per share on Tuesday. Maybe it was because the street got early word of the company’s plans, announced after the close, to eliminate 450 jobs and dismiss its new president.

If so, the bargain-hunters are suffering from memory loss. Let’s review some recent history:

In early February, Critical Path said it may have “materially misstated” results for Q4 2000, prompting the Nasdaq to halt trading for nine days. The company earlier had reported Q4 revenue of $52 million and a loss of $11.5 million, but said a number of sales recorded on its books were under review. CPTH suspended its president and worldwide VP of sales, both of whom soon were fired or resigned.

In mid-February, the company’s CEO resigned as shareholder lawsuits began to fly and the U.S. Securities and Exchange Commission began an investigation.

Last week Critical Path “restated” its Q4 and Q3 results from last year, bumping down Q3 sales to $35.3 million from the $45 million reported last October, while Q4 revenue was reduced to $42.3 million from $52 million. CPTH also said it was taking a $1.3 billion charge for asset writedowns.

This is a company still deep in the woods, with no clear path (critical or otherwise) out.

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