Talk about the fall of the mighty.

Yahoo!

(YHOO)

, the pioneering directory for navigating the World Wide Web, took out a full-page ad on Monday in

The Wall Street Journal

to let people know it's a good place to search the Web.

No doubt Yahoo!, two days before the company's slated release of first-quarter financial results, wanted to flood the press with good news about improvements in its search engine. The company's

custom in recent quarters has been to make at least one high-profile announcement just prior to its earnings release.

But the announcement is also a reminder of how Yahoo!, which was once as synonymous with searching the Web as Netscape was with browsing it, has ceded much of its dominance to Google, which supplies its automated search engine results to Yahoo! and to other Internet properties. And even as the company rides an improving financial picture to a modest stock-price revival, the publicity push points out just how difficult the competitive picture remains for Internet companies, even the ones that clearly have staying power.

What a Difference

Among U.S. users,

112 million searches are conducted per day on Google, compared with 42 million on Yahoo!, according to Nielsen//NetRatings statistics compiled by SearchEngineWatch.com, a Web site focused on the Internet search industry.

And recently,

more individual users have visited Google each month to search the Internet than have gone to Yahoo! according to Nielsen//NetRatings statistics.

"I suppose, to some degree, Yahoo! has to reawaken in consumers' minds the idea that it's a search leader," says Danny Sullivan, SearchEngineWatch.com's editor. "You couldn't imagine them having to run an ad like that in '95, '96, '97."

Two Views
Yahoo! recently -- and over the long haul

Yahoo!'s shares fell 19 cents Tuesday to close at $23.81.

If Yahoo! has room for improvement, someone on Wall Street must believe it will take advantage of it.

The company, which will release results for the March 31 quarter after the market closes Wednesday, is trading at about 80 times the Thomson First Call analysts' consensus of 30 cents in 2003 earnings per share. The revenue consensus for the year is $1.2 billion, up 27%.

First-quarter expectations call for per-share earnings of 6 cents on revenue of $273.7 million. The company has guided for earnings before interest, taxes, depreciation and amortization of between $60 million and $70 million. The second-quarter consensus, which Yahoo! will likely update Wednesday, calls for EPS of 7 cents on revenue of $292 million.

Breadth Winner?

Despite Google's ascendance, Yahoo! -- which employs search results supplied by Google on its site -- is garnering an increasing amount of money through paid search, chiefly pay-per-click advertising supplied by Google rival

Overture Services

(OVER)

.

Yahoo! says that it expects sponsored search revenue to jump from $131 million in 2002 to as much as $240 million in 2003. Following Yahoo!'s acquisition of Internet search technology firm Inktomi earlier this year, the company is expected to issue revised guidance incorporating Inktomi's numbers. Yahoo!, which guided to an EBITDA range of $295 million to $330 million for the year, will be able to boost EBITDA guidance by $12 million for 2003 and $60 million for 2004 thanks to Inktomi, says SoundView Technology analyst Jordan Rohan.

In recent days, Yahoo!'s stock has traded higher than it has for the past two years, though it is still nowhere near its $200-plus split-adjusted heights of early 2000. The company has spent the past years seeking to diversify its revenue stream beyond the banner advertising that fueled its growth through the peak of the short-lived dot-com bull market.