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Yahoo! Fires Back at Google

The Net media giant plans to expand the memory available with free email services.



raised cash-flow guidance at the close of its analyst day Thursday, a day when the company announced an email initiative to compete with that of search rival



Chief financial officer Sue Decker said the company was now targeting an operating cash flow margin in the range of 40% to 45%, up from the 32% to 35% range forecast at last year's meeting.

Earlier in the day, Jim Brock, Yahoo!'s senior vice president for communications and consumer services, told attendees of the San Francisco meeting that Yahoo! would raise the storage limit on free Yahoo! email accounts to 100 megabytes this summer, up from the current maximum of 6 megabytes.

It was all part of a daylong presentation, telecast on the Web, that was designed to highlight such areas as the advertising business, international growth opportunities and the challenges of Internet search engineering. Lurking in the background was Google, the search engine whose recent filing to offer stock to the public has captured much of Wall Street's attention.

But making a point that executives hammered at throughout the day, CEO Terry Semel said, "We all truly believe that we're just starting ... and that the best is yet to come."

Yahoo!, which reported a 37% OCF margin in the first quarter ended March 31, attributed the raising of guidance to its strengthening international operations. As

indicated early Thursday, the new 40% target

had been predicted by American Technology Research analyst Mark Mahaney.

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The email capacity announcement was a clear shot at Google, which is testing an email service that would come with a gigabyte of free storage -- in exchange for the right to sell ads to users based on the content of their email. The hotly anticipated service, which

some observers say could hurt Yahoo!'s email business, is called Gmail.

Brock said Yahoo!'s goal is to get to the point where "email storage is not an issue for the vast majority of our users."

Premium email users (e.g., those who pay to not have ads dropped into their email) and access customers (those who subscribe to fast Internet access via Yahoo! and digital subscriber line partner



) will have unlimited email capacity, Brock said.

Otherwise, the company offered the usual analyst day enthusiasm, case studies and PowerPoint analysis. In his presentation, Chief Operating Officer Dan Rosensweig discussed the variety of advertising that Yahoo! offers -- graphical, audio/video, search and user-targeted -- as well as the integration of various Yahoo! services.

To illustrate that integration, Rosensweig spoke of how Yahoo!'s email service is tied in to Yahoo's HotJobs career site -- enabling job-hunters to email easily without resorting to their work accounts. Rosensweig also demonstrated how Yahoo! Shopping is linked into other content on the site, using the example of Yahoo!'s sports area. "To buy on Yahoo! Shopping, you don't have to go to Yahoo! Shopping," he said.

Chief Marketing Officer Cammie Dunaway talked about the company's media campaign that presents Yahoo! as a "life engine."

Rosensweig's mention of the variety of advertising opportunities on Yahoo!, and Dunaway's description of Yahoo! as "much more than a search engine," can be interpreted as indirect swipes at Google -- the search engine that announced plans last month for its long-awaited initial public offering of stock.

Perhaps trying to blur the distinctions that people have drawn between its opportunities for advertisers and Yahoo!'s, Google is planning to offer graphical content-targeted advertising to augment the textual advertising that is its only offering today, it was reported Thursday.

Yahoo! shares, fresh off a 2-for-1 split, rose 2 cents to close at $27.10. Shares slid 12 cents after hours.