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Yahoo! CEO Sets Sale

Terry Semel rakes in $13 million as the stock declines.



chief Terry Semel has had something to shout about this month, even if most shareholders have been down in the mouth.

Semel sold $13 million worth of company stock last week, as Yahoo!'s new-year decline continued. The stock is down 17% for 2006, as investors reassess the growth prospects of big Internet players from






on down. On Tuesday, Yahoo! dropped 37 cents to $32.39.

Semel, who has been CEO of the most popular Web site since 2001, sold 400,000 shares on Feb. 15 through an options exercise for an average price of $33.21, according to a filing with the

Securities and Exchange Commission

. InsiderScore estimates that Semel has received more than $380 million from stock sales in the past 18 months, though last week's was his first transaction since October.

Unlike other Internet CEOs, including Google's Eric Schmidt, Semel doesn't have a preplanned schedule for his stock sales. Semel owns about 1.8 million shares of Yahoo! and has held his ownership at around that level for several years.

Though investors use insider sales as a barometer for sentiment about stocks, that can be tougher to do with Internet companies that have doled out massive amounts of stock options. In fact, Semel's previous sale -- he ditched 3 million shares in October -- came before a big run-up in Yahoo!'s shares, notes Ben Silverman, research director at InsiderScore.

"If he would have waited a month, he would have made a lot more money," Silverman says. Still, he says, investors don't like to see a CEO selling shares, especially when the shares have declined in value. "Why sell at these levels?" he asks.

Yahoo! couldn't immediately be reached for comment.

Many Wall Streeters continue to like Yahoo! shares, expecting the company to benefit from the same trends that continue to help Google, though to a lesser extent. Four analysts have upgraded the stock since Jan. 18. But there is no denying that the stock appears pricey. Based on 2007 earnings estimates, Yahoo!'s P/E at recent levels is 44. By contrast, Google -- whose shares have dropped 10% this year amid worries about its own valuation and prospects -- sports a multiple of 30.

Yahoo! already faces skepticism that it can compete with Google on the search front, and it may face additional pressure on its bottom line as niche Web sites try to capture some of the advertising dollars that had all gone to the big portals.

"They are only getting more competition as time goes on, and of course the growth rates have come down," says Phillip Remek, an analyst with Guzman & Co. who has one of the few underperform ratings on the stock.

Still, Yahoo! does have potential growth opportunities, such as in the expansion of its reach to mobile devices. Yahoo! on Tuesday introduced a new service with



and Cingular Wireless called AT&T Yahoo! Go. This allows people to access their Yahoo! services, including email and instant messaging, over their cell phones.

The company continues to be one of the strongest franchises on the Web, with the most unique visitors. Unlike Google, Yahoo! has a diversified revenue base from its range of services that range from fantasy football to Web personals.

"Yahoo! is much more entrenched with the larger advertisers," says Martin Pyykkonen, an analyst with Hoefer & Arnett, who rates Yahoo! strong buy.