The Daily Interview: Yahoo! Isn't Worth an Exclamation Point Yet
(This interview was conducted by phone Wednesday evening.)
Yahoo!(YHOO Quote) eked out a tiny profit for the first quarter, beating lowered expectations by a nose. The blue-chip
Internet company also warned of a rough road ahead and pulled the trigger on layoffs. Yahoo, whose recent push into porn has been making headlines, also stressed how it is diversifying its current reliance on online advertising for 85% of its revenues by starting to charge customers for premium services and developing co-branded corporate Web sites. ![]() Jeffrey Fieler Managing Director Consumer Internet Research at Bear Stearns |
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, and they made four times that in cash [earnings per share]. (Laughs.) The problem continues to be that most of that consumption is for free. All those users are there, but they are not paying to be there. The onus on the company is to extract value from those numbers and that traffic. If you want to know why there is such a management turnover, it's because the business model is changing to focus on these profit-making premium and co-branded sites. TSC: Koogle also mentioned direct marketing and cross-promotions. What is Yahoo! doing in this area and how important is it? Fieler: Direct marketing and cross-media marketing promotions are very important. Branding advertising seems to be the one area of Internet advertising that companies are turned off to right now. But they still see the Internet's promotional value. If you look at what Pepsi(PEP Quote) did on the Internet last fall with the mypepsi.com promotion, or what they did with Britney Spears, that's not branding advertising, that's promotional. And that's really where people are putting their dollars. Letting companies and corporations have a co-branded site really differentiates Yahoo!, because Yahoo! has a strong brand to bring to such a promotion. TSC: The company is looking to find a new CEO to fill Koogle's shoes. Do you have any advice for Koogle's eventual replacement? Fieler: With the stock where it is now, there isn't a lot of pressure for the company to perform in the next quarter. There aren't high expectations built into it. My advice would be, take your time to make sure you've got the long-term strategic pieces right. If the guy who comes in can leverage the platform right, he will go down as one of the greatest business heroes of the 21st century.
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