No Blockbuster Tie-Ups for Yahoo
- By Joseph Menn
- Jan. 13 2000 00:00
Executives at Yahoo Inc., the most popular spot on the World Wide Web, said Tuesday that they will keep buying smaller businesses but don't plan any blockbuster mergers in response to the seismic shake-up caused by rival America Online's proposed merger with Time Warner.
Concern about the deal's impact on Yahoo contributed to a sharp decline in the Santa Clara, California-based Internet directory's stock price during the day. The slide continued in post-market trading, even after the company reported fourth-quarter earnings that beat published expectations.
Yahoo reported fourth-quarter net income of $57.6 million, or 19 cents a share, before costs associated with acquisitions, up from $12.8 million a year earlier.
Revenue soared to $201 million from $91.3 million, a growth rate the company said won't last. Yahoo's global audience doubled to 120 million unique users.
Yahoo shares tumbled $38.69 to close at $397.38 in regular NASDAQ trading, then lost another $25.38 in after-hours activity to $372.
The earnings were reported after the market close.
"They used to beat the numbers by so much, people thought that was the norm," Lehman Brothers analyst Brian Oakes said.
The volatile stock, which briefly topped $500 a week ago, has come to symbolize investor sentiment about the Internet even more than AOL.
Yahoo is one of the few profitable net companies, despite relying on advertising income instead of the subscription model used by AOL.
Yahoo chief executive Tim Koogle said on a conference call with investors and analysts that the company will stay the course, not tie itself to one means of getting onto the net or to one family of consumer brands.
"By staying independent, we're able to attract the broadest array" of web surfers, Koogle said. "We see no reason to change."
Yahoo officers said the company planned to file on Wednesday in the United States for the right to issue $750 million in shares for future acquisitions and is most interested in specialized "content aggregators" and the makers of "enabling technology."
But that did not reassure investors worried about the increased power of AOL to deliver Time Warner's household names at high speeds.
As an example, Yahoo Sports, which includes material from a number of content providers, now has a more formidable foe, analysts said.
"You'll be up against another service that has real brand names - it's not just AOL Sports, it's Sports Illustrated," said CS First Boston analyst Lise Buyer. "It's not just Finance, it's Fortune."