As Yahoo!'s (YHOO) release of fourth-quarter financials approaches, the current year looks as if it will be better than the last one for the Internet bellwether. How much better, however, remains an open question.

As if to demonstrate that any success for Yahoo! in 2002 will be a series of singles, not a home run, the company participated in an industry effort, announced Tuesday, designed to ease one of marketers' major qualms about advertising online -- varying methods of advertising measurement.

Like some other initiatives that Yahoo! has taken, the industrywide online advertising agreement is incrementally good for the company, though it won't result in the revenue growth that flowed Yahoo!'s way during the dot-com advertising rally.

But like a free agent signed by a pennant-hungry ball club at an eye-popping salary, Yahoo! has to make magic happen if it's going to live up to the money that people are paying for its stock.

Clearly, investors believe that most of the bad news is out of Yahoo!'s stock. It traded recently at about $19, more than double its 52-week low of $8.02, hit in September.

Everything Must Go!

The first test of investors' rediscovered faith in Yahoo! comes after the market's close Wednesday, when Yahoo! is slated to release financials for the fourth quarter ended Dec. 31. Analysts are expecting revenue at the midpoint of the $160 million to $180 million guidance range that Yahoo! has given, well off the $311 million in revenue the company enjoyed in the fourth quarter of 2000. Earnings per share are expected to be a penny for the quarter, according to Thomson Financial/First Call, down from a 13-cent profit in the fourth quarter of 2000.

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How Yahoo! performs against these expectations, and what guidance, if any, it gives for the current quarter, may hint as to whether stockholders' confidence in the company is warranted. The First Call consensus is for Yahoo! to report full-year 2002 EPS of 9 cents a share, up from this year's expected nickel -- implying a forward

price-to-earnings ratio higher than 200.

That's a mighty rich valuation for a growth company. And though Yahoo! once was a growth company, it isn't much of one anymore, at least in the near future. Analysts are expecting $734 million in revenue in 2002 for Yahoo, up 5% from 2001 expectations. Under new CEO Terry Semel, Yahoo! is embarking on numerous initiatives, from subscription music to small-business services, to reduce its dependence on advertising revenue. The efforts seem sensible, and many may be profitable. But 5% does not a growth company make.

Christmas in July!

At least on Tuesday, there was good news for the online advertising industry in general. The Interactive Advertising Bureau industry trade group announced a set of guidelines designed to make Internet advertising easier to buy. Specifically, the group has come up with common definitions of basic online-ad vocabulary terms and measurements, for example, exactly what is meant by a "click." The answer isn't as simple one might believe.

The idea, says IAB president Greg Stuart, is to address advertising agencies' longstanding concerns about the lack of reliable measurement of Internet advertising -- primarily, problems that arise when an advertising agency and a Web site publisher come up with different numbers when they try to determine how many of a marketer's ads actually have run on a particular site.

"When there's a discrepancy between an agency's numbers ... and a publisher's numbers, then that discrepancy needs to be resolved," says Stuart. "And that takes man-hours to do. ... There are all these operational costs." Stuart says the IAB hopes that the new guidelines, reached in conjunction with advertisers and marketers, will fix more than half of the discrepancy problems that arise.

One ad industry representative calls the guidelines a great first step. "We're so thrilled to have this progress made," says Barbara Bacci Mirque, senior vice president of the Association of National Advertisers industry trade group. But she says there's more work to be done, starting with industrywide implementation of the voluntary guidelines.