Yahoo! Looks for Some More Predictability From Advertisers

The Net portal is among the firms checking out its clients' businesses to gauge their fortunes.
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SAN FRANCISCO -- Call it the end of mad money.

Critical Path

(CPTH)

CEO Doug Hickey made an interesting reference in his presentation at the

Robertson Stephens Internet Conference

Wednesday. He touted his $291 million in cash and equivalents, but not just to show the audience how round and fat his wallet is.

Hickey is doing deals in a different business climate, and his cash wad wedges open the base of a now-sticky door that was swinging in the wind half a year ago. "When you're striking deals with

WorldCom

and

eBay

, not only do they look at your technology, but they look at your balance sheet," he said.

If only

Yahoo!

(YHOO)

could do the same.

The Internet portal's CEO, Tim Koogle, was the feature participant in a lunchtime gathering of a gaggle of Robbie Stephens analysts. It was interesting timing, given that Yahoo! buckled under a one-two analyst and media punch last week over declining dot-com advertising revenue. Analyst Lowell Singer went for Koogle's kidneys as the audience ate its raspberry tarts, and asked about Yahoo!'s advertising outlook. (For a conference calendar, click

here.)

Koogle played it super cool, as usual. "There is a period of consolidation under way and it's healthy, as painful as that is," he said. "We've been in it for about nine or 10 months, where companies and capital are getting rationalized. It will take a little of the upside away in the near term." (Koogle's words hit Yahoo!'s

stock hard in after-hours trading Wednesday.)

Not exactly what you'd call hysterics, but constricted advertising dollars are touchy for Yahoo!, because its revenue model won't stop depending on ad bucks anytime soon.

Koogle reminded everyone of two things: He's got a lot of

Fortune 500

customers, and there's never before been a medium so quantifiable. Not that it dulls the pain much. Yahoo! has two programs designed to handhold the traditional advertiser online -- one provides consulting and the other helps them select complementary ad buys on the Yahoo! network.

Koogle added that Yahoo! is investigating the business of its 3,500 clients "to look at their business models and to see where are they on the curve" in an effort to get more predictability on its advertisers' fortunes.

It's just a matter of time.

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