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TheStreet Open House

Yahoo! Holds Off on Phone Ads

"It doesn't hurt to experiment with it," says Darren Chervitz of Jacob Asset Management, which owns shares of Yahoo! among $70 million under management. "Over time, it will occupy a decent niche, but I don't think it's going to revolutionize the search business."

Still, some online merchants have found click-to-call useful -- particularly on transactions involving high-end items. Consumers typically have a lot of questions before they make such purchases, says Craig Smith, who runs Trinity Insights, an e-commerce consulting firm based on Conshohocken, Pa., outside Philadelphia.

"When it's a straightforward purchase, it doesn't make sense," he says.

Click-to-call is the latest in a long line of potential bright spots that bullish investors hope will boost the lackluster performance of the Internet sector. Shares of Yahoo! are down 26% this year, and eBay is off 37%. Even Google is weak, down 9% after doubling in both 2004 and 2005.

"It's premature for people to get excited about click-to-call-related announcements," says Standard & Poor's analyst Scott Kessler, who rates Yahoo! a hold, in an interview.

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