About the only surprising thing about Yahoo! Inc’s fourth quarter results and stock split announcement yesterday was that the ratio of the split was not higher. The Santa Clara-based internet star announced a two-for-one split effective February 8 for those on the register January 22, but given the stratospheric rise of the company’s stock, especially in the last few weeks, a three-for- one might have been in order. Yahoo reported fourth quarter net profits of $18.5m, which included $4.4m in acquisition-related charges and $869,000 in charges for amortization of intangible assets, against net losses last year of $1.9m, which also included charges. Before the charges the company turned in net earnings per share of 21 cents, which was five cents ahead of Wall Street’s expectations. Fourth quarter revenues rose 187% to $76.4m, ahead of chief financial officer Gary Valenzuela’s predictions of about $65m. The stock has been riding the most recent internet wave and closed yesterday at $402, a $12.50 drop on the day but still an incredible price given that the stock was under $200 at the start of December. The market capitalization was $47.13bn at yesterday’s closing price. The shares declined in after hours trading before being halted at less than $400. But the company says the stock price is not proving a barrier to recruiting people who traditionally would require significant stock options. Chief executive Tim Koogle does not believe that 1999 will be much different from last year in terms of the overall shape of the market, despite the AOL-Netscape merger, the launch of Infoseek-Disney’s Go portal yesterday, and the expected rise of MSN as a portal. He says the market is more than big enough to support…several large global branded networks. Koogle says it is too early to try to predict whether or not Yahoo will begin to offer subscription-based services in the future, but acknowledges that discussions have taken place about such a move, in particular for non-PC devices. But it could not be done until Yahoo users feel its services are embedded in their lives, he adds somewhat chillingly. Average daily page views were 167 million in December, up 16% from 144 million in September. The number of advertisers increased to 2,225, from 1,950 three months earlier. Yahoo now has around 35 million registered users across its range of services, which means it can offer advertisers what it claims to be the web’s largest targeted user base on the web. The Yahoo board has approved the promotion of Jeff Mallet, adding president to his current COO title and CEO Koogle has been appointed chairman, but he emphasized that there has been no operational changes at the firm as a result. Cash and equivalents at the year-end were $481.4m, and ignoring money raised form the market and a private placement, the company generated $124m in cash during 1998. The $38.3m in deferred revenues in the balance sheet is not a backlog, emphasized Valenzuela. He said that the company does not add the numbers to its top line until the ad impressions have been delivered. In line with recent SEC-enforced change in reporting practices, Yahoo has cut its second quarter in-process research and development charge to $15.0m from $44.1m and adjusted amortization of related intangible assets for the second and third quarters.
