Yahoo! Raises the Bar Again

Updated from 4:52 p.m. EST

Driven by a variety of business initiatives, Internet media survivor Yahoo! (YHOO Quote - Cramer on YHOO - Stock Picks) beat estimates for 2002's fourth quarter and raised them for 2003.

But Yahoo!'s stock, which has doubled since October, fell 80 cents, or 4%, in after-hours trading Wednesday to trade at $18.78.

For the fourth quarter ended Dec. 31, Yahoo! said revenue rose 51% from a year ago to $285.8 million -- near the high of the guidance the company gave in October, and ahead of the $278.6 million consensus estimate from Thomson Financial/First Call. On a same-store basis -- that is, excluding revenue from the HotJobs service acquired in early 2002 -- revenue rose 39% year over year.

Fourth-quarter earnings, according to generally accepted accounting principles, amounted to $46.2 million, or 8 cents per share, reversing the year-ago 2-cent loss. Analysts had forecast a 6-cent profit in the latest period.

"We just finished Act One, and much more is yet to come," said CEO Terry Semel on a conference call with analysts.

Advertising revenue, which amounted to 62% of fourth-quarter sales, grew primarily through Yahoo!'s sponsored search business -- mainly, pay-per-click search listings provided through an agreement with Overture Services (OVER Quote - Cramer on OVER - Stock Picks). Separately, Semel told analysts that traditional advertising sales grew sequentially in each quarter of 2002.

Fees and listings, which accounted for 32% of the quarter's revenue, grew 65%, thanks to the HotJobs acquisition and more paying customers for the company's existing services in the category, such as Yahoo! Personals and the Internet service provider business offered in conjunction with SBC Communications (SBC Quote - Cramer on SBC - Stock Picks).

Transactions revenue grew 45% to $19 million for the fourth quarter, driven primarily by an increased number of transactions enabled by Yahoo! and a change in Yahoo! Store pricing from fixed fee pricing to a transaction-based system.