Deals Take Back Seat as Yahoo! Readies Earnings Report

Despite the recent buying spree, investors are still paying attention to the financials.
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If any company has a lot going on right before earnings time, it's Yahoo! (YHOO) . The Santa Clara, Calif., portal and search company is buying not only the online community site GeoCities (GCTY) but also broadcast.com (BCST) , the dominant player in streaming technology. With this double set of multibillion-dollar deals in the hopper, the earnings report due Wednesday morning is of little consequence, no?

Not so fast, say investors. People want to be sure, they say, that Yahoo! has continued its relentless growth in a market-leading quarter. "They're a bellwether," says Emeric McDonald, director of research for

Amerindo Investment Advisors

. (Yahoo! was the

(ATCHX)

Amerindo Technology fund's largest holding as of December.) "People want to see that all the momentum around the Internet is continuing."

For McDonald, that means that Yahoo! must continue to show year-on-year revenue growth of 150% to 200%. That would mean first-quarter revenue should clock in at $75 million to $90 million, compared with $30.2 million for the first quarter of 1998. That's in line with sell-side analysts' predictions:

Credit Suisse First Boston's

Lise Buyer, for example, is predicting revenue of $81.5 million for the quarter.

As for earnings per share, the

First Call

consensus prediction is 8 cents. The 25 analysts surveyed are clumping in a tight little group, with the top prediction at 9 cents and the bottom at 7 cents. But Yahoo! has edged out predictions consistently in the past, and the situation is not expected to be different this time.

"Yahoo! has established a track record of profitability -- a track record of improving and strong financials," says Abhishek Gami, an analyst at

William Blair & Co.

But the market isn't waiting around for the good news. On Monday, Yahoo! stock jumped nearly 40 points to 219 1/8; on Tuesday, after leaping as high as 244, it was trading at 226. But one stockholder pointed out a pattern here: "It always runs up ahead of the quarter and always sells off after."