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Yahoo! stock tumbles
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March 8, 2001: 1:40 p.m. ET
Analysts cut forecasts after warnings from Internet media company
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NEW YORK (CNNfn) - Yahoo! stock sank nearly 19 percent Thursday as several brokers cut their earnings forecasts while others suggested the Internet company could be a takeover target following a warning that its first-quarter results will fall well short of already lowered forecasts.
Yahoo! shares fell $3.87 to $17.06, a new 52-week low in afternoon trading Thursday, after being halted for almost the entire trading session Wednesday pending the company's earnings warning. Other Internet stocks also fell amid worries that Web firms will face further weakness this year. Yahoo! once was one of the Internet's high flyers, trading as high as $205.62 over the past 52 weeks.
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VIDEO
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 CNNfn anchor Rhonda Schaffler asks the question: Do you Yahoo!? Aparently most people don't anymore, and the stock is getting hit hard. |
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Citing the slowing U.S. economy and uncertainty about its own position, Yahoo! executives warned late Wednesday that the Santa Clara, Calif.-based company would break even in the first quarter, missing Wall Street forecasts of a small profit. The company also said it has begun a search for a new chief executive to replace Tim Koogle, who will remain chairman.
Several Wall Street investment houses cut their estimates on Yahoo! (YHOO: Research, Estimates) early Thursday. In a rare move, brokerage SG Cowen issued a "sell" rating, saying that Yahoo! faces a "nasty, solitary and brutish" operating environment in 2001.
Lehman Brothers cut its forecast for full-year profit to 16 cents a share from 33 cents. And Credit Suisse First Boston cut its estimate to 2 cents a share from 35 cents and slashed its price target for the stock to $10 from $30 over the next six to 12 months. Analysts polled by earnings tracker First Call had anticipated the company would earn 36 cents per share this year.
"It is becoming very apparent that external conditions have weakened," Yahoo! chief financial officer Susan Decker told analysts during a conference call Wednesday. She said most businesses have frozen spending on advertising and marketing, on which Yahoo! relies for most of its revenue.
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 THE YAHOO! TEAM
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Who will replace Tim Koogle as CEO? Here's a look at Yahoo!'s current management team.
Chief Yahoos
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The announcement of Koogle's departure as CEO also sheds some light on Yahoo!'s recent decision to adopt a shareholders' rights plan, or a so-called "poison pill," which makes its stock less attractive in the event of a hostile takeover attempt.
Analysts in London told CNN that a number of media companies Bertelsmann, Vivendi (V: Research, Estimates), Viacom (VIA: Research, Estimates), Disney (DIS: Research, Estimates) and AT&T (T: Research, Estimates) could be possible bidders, particularly if Yahoo's share price falls below $10.
Since its shares have fallen more than 91 percent from a high of $237.50 reached in January 2000, the company has become much more vulnerable to a hostile takeover.
Yahoo! said it has hired Spencer Stuart & Associates, a senior executive search firm, to lead the recruiting effort for a new CEO.
-- from staff and wire reports 
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