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Yahoo! breezes through 3Q
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October 6, 1999: 6:26 p.m. ET
Web portal beats estimates by 5 cents a share as traffic continues to grow
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NEW YORK (CNNfn) - Yahoo! Inc. recorded a third-quarter profit of $40.4 million, easily beating Wall Street estimates as traffic running through its network of Web sites increased 24 percent.
The Santa Clara, Calif.-based company logged proforma earnings of 14 cents a share, well ahead of analysts' estimates of 9 cents a share, according to First Call. Yahoo! 's (YHOO) performance even exceeded the so-called "whisper number" of 12 cents a share that circulated through trading floors.
Yahoo!'s revenue climbed 134 percent to $155.1 million.
Yahoo! shares rose 2-7/16 to close at 175-3/4 prior to the earnings announcement. Its shares shot up to 183 in after-hours trade.
Yahoo!'s third-quarter results exclude charges related to its acquisition of Broadcast.com. Including those items, the company earned $14.9 million, or 5 cents a share.
Analysts were surprised at the success of Yahoo!'s performance in the third-quarter, which is typically a slow period in anticipation of the holiday season.
"They beat my revenue estimates by a wide margin," said Scott Reamer, an analyst at S.G. Cowen. "Twenty-one percent sequential growth in a seasonally slow quarter is pretty damn good."
Reamer maintains a "strong buy" rating on Yahoo!'s stock.
Page views, advertisers increase
Yahoo!, the No. 1 Web portal and considered by many analysts a bellwether of the rest of the sector, averaged 385 million page views a day in September, up 24 percent from the average of 310 million page views in June.
Web portals try to leverage strong traffic growth to lure more advertisers. Gary Valenzuela, Yahoo! chief financial officer, said the number of advertisers on the company's sites grew to 3,150 from 2,800 in the second quarter.
"Our advertisers keep coming back and spending more money with us," said Tim Koogle, Yahoo! chairman and chief executive officer.
In an interview with Reuters after the earnings were released, Yahoo President Jeff Mallett said the latest figures suggested Yahoo was beginning to take business away from some of the other top Internet portals as well as attracting new Internet users.
"It does appear that we may be starting to take a little bit of market share from our competitors,'' Mallett said, attributing Yahoo's success to the breadth of its product, which offers services from online greeting cards to online bill paying designed not only to attract consumers to the site once, but encourage them to return.
Because Yahoo is gaining so much momentum, analysts who track the Internet sector said the strength of this earnings report should not necessarily be taken as a sign of a blowout quarter for other online companies.
"I think these numbers speak to Yahoo more than anyone else,'' said Andrea Williams, an analyst with the investment firm E+Offering in San Francisco. "They are closing the gap on America Online, and distancing themselves from Lycos and Infoseek. (The earnings) are certainly not a bad sign for anybody else, but Yahoo's lead is impressive. I think we'll see a shakeout between winners and losers this quarter.''
During the third quarter, Yahoo's advertiser and merchant partner base expanded to 3,150 clients from about 2,700 in the second quarter.
Yahoo! officials did not detail how much advertising and e-commerce revenues the company garnered in the quarter.
Yahoo! easily beat its year-ago results, when it posted a profit of $6.9 million, or 2 cents a share, on $66.3 million in revenue.
-- from staff and wire reports
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