Yahoo! Watch: Top Line, Top Jobs Will Get Top Billing
When
Yahoo!
(YHOO)
beats first-quarter earnings estimates Wednesday afternoon, don't say, "Good job." Say "HotJobs."
The Internet media company, which has spent most of the past year on initiatives to dig itself out of the collapsed Internet advertising market, will likely surpass Wall Street's forecasts, thanks to the acquisition of online employment site HotJobs, completed halfway through the quarter.
Aside from the $12 million revenue boost analysts expect HotJobs to provide, investors will be paying close attention to how much progress Yahoo! is making on its multifarious effort to turn Yahoo! visitors into paying customers for a variety of services. Yet with the stock trading at a premium to the market in spite of its sharp decline from 2000 highs, it's not clear just how richly any progress might be rewarded by investors.
On Tuesday, Yahoo!'s shares fell 38 cents to close at $18.46.
Topping Out?
Ahead of Wednesday's postmarket financials release, analysts surveyed by Thomson Financial/First Call were expecting the company to earn 2 cents a share on revenue of $174.8 million. That top line is on the high side of the $160 million to $180 million guidance Yahoo! issued in January, but below the $180.2 million the company reported in the first quarter of 2001. A year ago, the company earned a penny a share in the first quarter.
Off-Peak |
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But not all analysts surveyed have included HotJobs results -- which Yahoo! excluded from its guidance -- in their first-quarter estimates. One who has, U.S. Bancorp Piper Jaffray's Safa Rashtchy, raised his revenue number to $191.9 million on Monday, up from $175 million.
Rashtchy based the increase mostly on estimated HotJobs revenue of $11.9 million, but the analyst also speculated Yahoo! would show better-than-expected ad sales, strong returns on its pay-for-placement search engine deal with
Overture Services
(OVER)
, and solid growth in transaction fees and premium services.
Danger Zone?
No matter how well Yahoo! performs, further stock appreciation puts the company in treacherous territory: It's trading at more than 90 times 2003 earnings estimates, says Rashtchy.
In addition to the numbers, investors will be seeking enlightenment on numerous recent developments at the company, such as the appointment this week of Daniel J. Finnigan as executive vice president and general manager of HotJobs. Finnigan was most recently president of
Knight Ridder's
(KRI)
Knight Ridder Digital, which operates online properties such as CareerBuilder, a joint venture with
Tribune
(TRB)
.
On Tuesday, Yahoo! announced plans to offer various services to small businesses in a venture with
SBC Communications
(SBC)
. The new offerings aren't likely to hit the market, however, until early 2003. The announcement builds upon an earlier agreement between the two companies to offer cobranded Internet services to consumers. The announcement of that venture, which hasn't yet launched, came in November, one day before Yahoo!'s annual meeting with analysts.
