Yahoo! Posts Loss, Sees Light at End of Tunnel

Web portal Yahoo! had optimistic news for Internet industry-watchers, but still posted another quarterly loss after figuring in new accounting procedures.

Revenues for the Sunnyvale, Calif. online bellwether totaled $192.7 million — well in excess of analysts’ expected $186 million, according to Thomson Financial/First Call estimates. On the bottom line, Yahoo! posted its sixth-straight quarterly net loss of $53.6 million, or $0.09 per share.

A large chunk of that net loss — $64.1 million, to be exact — stemmed from write-downs of impairment due to Yahoo!’s Jan 1. implementation of Financial Accounting Standard 142, or FAS 142. The procedure requires companies to assess the goodwill recorded from previous acquisitions, and if necessary, to record a one-time impairment charge. Without the charge, Yahoo! would have posted $10.5 million in net profit, or $0.02 per share — meeting analysts’ expectations.

A quarter earlier, Yahoo! posted revenues of $188.9 million, and a net loss of $7.8 million, or $0.02 per share.

While the news is promising for Yahoo! — which has now been reporting steadily increasing revenue for two straight quarters — much of the growth admittedly is due to the company’s recent acquisition of career site, rather than a drastic upswing in the online media market.

That’s in keeping with executives’ efforts during the last several months to overhaul the company to lessen its dependence on traditional forms of online advertising. Instead, Yahoo! in recent months has increased both its paid services and its enterprise products, including HotJobs’ recruitment services.

Yahoo! hasn’t been neglecting its efforts to win advertisers, however. Indeed, it’s been working to better its relationship with clients, establishing an office near Hollywood to better woo film studios to advertise on its properties. HotJobs, too, figures prominently into the plan: its online classified ads are considered somewhat more resistant to the current economic downturn than other online media — and more quick to bounce back when the economy recovers.

Another cause for optimism stems from Yahoo!’s growing user base. During the quarter, the company said its global audience grew to 237 million unique users, up 19 percent from a year earlier.

For those reasons, Yahoo! management raised the firm’s outlook for the second-quarter and full year. Figuring in HotJobs’ contribution for the first time, the company now expects second-quarter revenues to be between $205 million and $225 million, and between $870 million and $910 million for the full year.

Previously, the firm gave guidance for 2002 revenue of $725 million to $750 million.

Before charges, Yahoo! said first-quarter earnings will come in between $23 million and $33 million, and for the full year between $105 million and $130 million. Analysts had anticipated earnings of $0.02 per share for the quarter and $0.10 for the year.

“We posted solid results this quarter due to the transformation of Yahoo!’s business model,” said Yahoo! Chairman and Chief Executive Terry Semel. “Our quarterly performance demonstrates continued momentum as we move forward in executing on our strategic objectives. Additionally, we experienced significant growth in our key audience metrics and demonstrated the considerable depth and breadth of the Yahoo! network. As we progress through the year, we are well positioned to maintain our growth and to achieve our goal of more than doubling [pro forma] profitability in 2002 from 2001 levels.”

Chief Financial Officer Susan Decker added that the guidance assumed a continuation of current financial conditions — meaning that there’s also the possibility of greater upside should the economy see a significant rebound in coming quarters.

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