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Internet stocks say 'Yahoo!'
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July 8, 1998: 8:20 p.m. ET
Earnings, split announcement is rocket fuel for after-hours 'Net rebound
From Correspondent Bruce Francis
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NEW YORK (CNNfn) - Web giant Yahoo! Corp. surprised Wall Street after Wednesday's session close by reporting dramatically higher-than-expected earnings, pushing Internet stocks out of a two-day plunge into an after-hours rally.
Yahoo! announced earnings of 15 cents per share, vastly overshooting analyst predictions of 9 cents per share and even the Street "whispering figure" of 12 cents.
The company also announced a stock split and boasted that it now has not only the biggest audience on the Web but the largest registered membership, rocketing past America Online's (AOL) 12 million members with an 18-million-strong list of registered users.
Traders can't get enough of the stock, it seems, or shares in the Internet sector in general.
"I think if you're an institution, you own these stocks, you're pinching yourself saying, 'Oh, thank you,' " said Keith Benjamin, Internet stock analyst at BancAmerica Robertson Stephens. "Because it's helping your relative performance. And if you're selling any, you're not selling all your position."
Shortly after the announcement, Yahoo! stock (YHOO) was trading up 13-1/4 at 198-7/16 in electronic trading. Rival "Internet portals" -- once known simply as "search engines" -- also climbed, with Lycos (LCOS) leaping 7-1/2 to 85 and Excite (XCIT) adding 6-1/8 to 97-1/2.
The Internet Fund has more than doubled its value so far in 1998, but the course has resembled a roller-coaster ride at times. The fund gained 10 percent on Monday, only to lose 6 percent on Tuesday -- an enormous degree of volatility by mutual fund standards.
"Everyone's expecting, and should expect, that these companies will continue to post very impressive gains," explained fund manager Ryan Jacob. "A lot of these companies are still growing 30-50 percent per quarter. There will be other issues that people will be looking at. With Yahoo!, it may not be just revenues, it may be page views. With an Amazon, it may not just be revenues, it may be number of new customers they've acquired over the last quarter."
Amazon.com (AMZN) stock also surged after hours in reaction to the Yahoo! tidings, leaping 5-7/8 to 113 after plunging 15 points during regular trading.
Part of the allure of the Internet has been the feeling that it is a "frontier" industry, ripe with potential adventures -- both technological and financial.
Individual investors are among the most active traders of Internet stocks, and as long as the romance continues, analysts expect them to remain loyal to investments like Yahoo!
"I think that the stocks will recover again because the small investor that logs on to the Internet just sees the romance and the lure and says 'buy,' " said Ulric Weil of Billings, Friedman, Ramsey & Co. 
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