Yahoo! Calls It Quits in Denmark

Updated from 12:40 p.m.

Yahoo! (YHOO Quote) is shuttering its local operations in Scandinavia.

The Internet bellwether is closing its Copenhagen, Denmark, office at the end of the month, and will effectively cease operating sites specific to Denmark, Norway and Sweden, a Yahoo! spokeswoman confirmed Monday.

The impending shutdown, which Yahoo! says will result in the layoffs of fewer than 15 full-time employees, was earlier reported by Agence France-Presse, which cited its own reporting as well as a bulletin from the Danish daily Jyllands-Posten.

More than 70% of the users in the affected countries have been accessing Yahoo!'s English-language "yahoo.com" Web site rather than the localized versions, said the spokeswoman. Despite the closing, Yahoo! will continue to host mail accounts set up in the local domains of yahoo.dk, yahoo.se and yahoo.no, she said.

While Yahoo! has sought growth in the U.S. -- for example, through last year's acquisition of pay-per-click advertiser Overture Communications -- it has long been expanding internationally as well.

The company said last year it was focusing its international efforts on the major countries in which it already operates in Europe and Asia. Yahoo! is a major shareholder in Yahoo! Japan, and like other U.S. companies it regards the Chinese market as a huge opportunity.

Excluding, as most analysts do, traffic acquisition costs incurred by Overture, Yahoo!'s revenue from outside the U.S. amounted to $233 million in 2003, up from $146 million in 2002.

But international operations aren't yet contributing to the bottom line the way U.S. operations are. International revenue, ex-TAC, amounted to 15.8% of the company's total in 2003. But international operating income, before depreciation and amortization, amounted to 7.5% of total operating cash flow.

AFP reports that the Danish unit posted the equivalent of a $3.6 million loss in 2002, the last full year it said had been reported, a loss that was double the prior year's.

Yahoo!'s operating cash flow from its international business went from a $7 million loss in 2002 to $34 million in the black for 2003.

Driven by investors' increasing confidence in Yahoo!'s growth prospects, shares in the company have nearly tripled over the past year. Yahoo!'s stock was trading at $47.31 Monday, up 22 cents. The current share price implies a P/E ratio of 89, based on the Thomson First Call consensus for 2004 earnings.