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Investors Go "Yahoo!"
over Earnings Report By Chris Coyle Internet portal Yahoo! (NASDAQ: YHOO) reported better than expected earnings of $0.12 a share after the closing bell Tuesday calming investors fears of falling dot-com advertising revenues. Revenues for the second quarter were $270 million, up 109 percent from the $128.5 million reported the same quarter last year. Sequentially, revenues were up 18 percent. Net income came in at $74 million, or $0.12 a share excluding an acquisition-related charge, compared to the $27 million, or $0.05 a share, the company made in the same quarter last year. This number beat analysts expectations of $0.10 a share and met the whisper number of between $0.11 - $0.12 a share. Yahoo!'s operating margin, which was 37.6 percent, also met expectations. Shares of Yahoo! rocketed 19 7/16 to 124 15/16 on Wednesday as investors reacted to the news. Traffic Yahoo! is also expanding globally. An average of 33 million page views were recorded on Yahoo! Europe per day, while last month, Yahoo! Japan had 20 million unique visitors. Despite the increased global reach of the company, shown by the fact that 40 percent of Yahoo! users are from outside the U.S., only 15 percent of sales come from those users. The 15 percent, however, is an increase from the 9 percent in the same quarter last year. Advertising Even with advertising worries, the long-term future of advertising seems to be strong. Jupiter Communications recently predicted in a report that advertising sales on the net would reach $11.5 billion in the year 2003. This would be up from the $4.6 billion in ad sales in 1999. Even with these encouraging numbers, Yahoo! is pursuing more diversified revenue streams. Some of these are:
A
Valuation Concern This has become increasingly worrisome to investors as internet company's valuations are becoming more scrutinized. This is evident in the stock price, as the stock has fallen from a 52-week high of 250 1/16 to its current price of 122 9/16. The
Future of Yahoo! It has a huge brand name; even if you are not familiar with the net, you've probably heard of Yahoo!, and if you are familair with the net, you're probably a registered user there! Also, Yahoo! is a great web site. It has so much information; everytime I go there, I find more and more new stuff to do. It is like the Wal-Mart (NYSE: WMT) of internet content. It has everything. Lastly, Yahoo! is profitable. Profitablitity is a key ingredient missing in many internet companies, but is not absent at Yahoo!. This is by no means a detailed analysis of Yahoo!'s business, but rather just a short, quick look at it. However, I can't help but imagine the potential of this company many years down the road. Even though short-term movements may depress the stock price, it appears that Yahoo! is doing things right for the long-term. Now
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Copyright © 2000 Chris Coyle (StockChamp). All rights reserved.