told investors what they have wanted to hear for a long time: The world's leading Internet portal gets it about not relying on online advertising for revenue.
Speaking at the
conference, Yahoo! CEO
pitched the idea that the company is moving quickly to maneuver its huge audience toward paid services and is selling its technology to business. And, Koogle hinted, the portal might be doing it more quickly than expected.
The market liked what it heard, pushing Yahoo! today to close higher, up $2.81, or 9.9%, to $31.31. Even with today's gain, Yahoo!'s shares have lost more than 15% of their value since the beginning of the month.
"He indicated he was really upbeat about Yahoo! enterprises; he is sending the Street a signal that nonadvertising revenue is ramping up very fast," said analyst Safa Rashtchky of
U.S. Bancorp Piper Jaffray
. (Rashtchky rates the stock a neutral, and his company has not done recent underwriting for Yahoo!) "If he sends a signal that there is upside to the nonadvertising revenue, then the market will react as it did today."
About 90% of Yahoo!'s revenue comes from advertising, which has skidded for online properties since last year. Investors have been pressing the giant portal to come up with ways to leverage its vast online reach, which includes about 64% of Internet users.
Subscription for premium services is one of those ways.
analyst Michael Parekh wrote in a note today that Yahoo! was testing personal finance and entertainment services, and that Koogle said they would be rolled out "very soon." (Parekh rates Yahoo! a buy, and Goldman has done underwriting for the company.)
Koogle also touted the portal's enterprise offering, Corporate Yahoo!, which lets companies customize corporate sites using the popular My Yahoo! interface. So far, 18 companies have licensed the technology and another two dozen are testing it.
The Yahoo! CEO acknowledged that rates for banner ads were facing pricing pressure.
Henry Blodget in a note today had some more encouraging news for Yahoo! and a few other selected online advertisers.
For one thing, Blodget, a long-time Internet bull, wrote that he thinks the first quarter of 2001 will represent the trough for online ads.
The analyst said he expected Yahoo!,
AOL Time Warner
were best-poised among online advertisers to gain market share from other advertisers during the quarter, although he estimates that Yahoo!'s revenue will be down 25% from the previous quarter. Blodget rates Yahoo! a buy. (Merrill has done underwriting for AOL, but not for Yahoo! or Microsoft.)