The Internet boom long having passed, Yahoo! (YHOO) keeps reminding Wall Street that it has changed its ways.
Wednesday's events are likely to confirm that investors have noticed -- and that the company's progress hasn't been enough.
Clearly Wall Street appreciates Yahoo!'s diversification efforts over Net ad-related sources of revenue, as well as its continuing push to boost profitability. That said, the slow and steady nature of Yahoo!'s growth appears unlikely to inspire anything better than a halting rebound in the company's beaten-down shares.
Yahoo!, which is slated to release second-quarter financial results after Wednesday's market close, fell 19 cents Tuesday to close at $12.70. That means the shares are up 58% from their 52-week lows of last September, but down 41% from the 52-week high hit six months ago.
In a helpful reinforcement of the message that Yahoo! is looking for money in areas other than the venture capital fueled advertising revenue of its youth, Yahoo! announced Monday that it had reached an agreement with
under which SBC's Yellow Pages sales force will also sell placement in Yahoo!'s online Yellow Pages.
The announcement, which echoes other business alliances that Yahoo! has proclaimed in the days leading up to earlier quarterly financial releases, is a perfectly sensible one, building as it does on a similar longstanding arrangement with
and Yahoo!'s previously announced alliances combining Yahoo!'s online brand and services with SBC's Internet access business. "It's a natural progression for us," says Elizabeth Blair, senior vice president of Yahoo!'s listings business unit.
But though the migration of Yellow Pages advertising from printed books to online listings looks promising -- Yahoo! kicks around industry figures estimating the size of the Yellow Pages market at $14 billion annually, compared with less than $400 million for online listings -- that online Yellow Pages revenue doesn't seem like it will be racing to the bottom line, given the balky progress of the online Yellow Pages up until now. (The Yahoo!-SBC deal is expected to be implemented by the end of the year.)
It's hard to argue with the strategy of the Yellow Pages deal, as long as one keeps it in the context of a variety of fee-generating and subscription-inducing efforts in which Yahoo! has ventured. In addition to hearing a progress report on the larger SBC alliance, investors will also be curious to know how things are going with Yahoo!'s HotJobs career site, acquired earlier this year, and
, the pay-for-placement search engine with which Yahoo! extended its relationship earlier this year.
For the record, analysts surveyed by Thomson Financial/First Call are expecting a 2-cent profit for the second quarter ended June 30, compared with a 4-cent loss in the second quarter of 2001.
Revenue is expected to be $215 million, at the midpoint of the guidance that Yahoo! gave in April for the second quarter, a range of $205 million to $225 million. For purposes of apples-to-oranges comparisons, Yahoo! reported $182.2 million in revenue in the second quarter of 2001, well before Yahoo!'s acquisition of HotJobs.