Yahoo! Slips on Steady Guidance

Each of Yahoo's different business segments was in line with analyst expectations, which had crept up beyond the First Call numbers in the days preceding the release of fourth-quarter results.

Net marketing services revenue in the fourth quarter, boosted by the acquisition of the Overture Services pay-per-click search engine operator, amounted to nearly $393 million, double the marketing services number reported last year.

On the call, Semel said the company's marketing services revenue grew more than 40% on an organic basis -- that is, excluding acquisitions -- and gained momentum throughout 2003. He forecast that ad revenue would grow an additional 25% to 30% in 2004, exceeding the 20% growth in online advertising that some observers expect.

Fees revenue grew 37% from the prior year to $85.2 million in the fourth quarter, driven by the company's Internet access offering with SBC Communications (SBC), small business services and personals. The company has what it calls "paying relationships" with nearly 5 million Yahoo! users, up from 4.3 million at the end of the third quarter.

Listings revenue grew 21% to $33.2 million, thanks to the company's HotJobs business and other activities.

Excluding contributions from recently acquired businesses, Yahoo! is forecasting organic revenue growth of 31% to 36% in the first quarter of 2004 and 25% over the full year.

The stock has nearly tripled over the last year as Wall Street has rediscovered its love of pricey growth plays in the Internet and telecom businesses. Yahoo! has impressed shareholders over the last year by expanding its business and boosting its profit margins, but the company's shares continue to trade in the neighborhood of 90 times 2004 earnings estimates.

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