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Yahoo Posts Strong Profit in Third Quarter

Earnings: Results again beat analyst estimates as traffic to the No. 1 Internet directory's Web site soars.

October 08, 1998| From Times Wire Services

Yahoo Inc. beat analysts' expectations again, reporting strong third-quarter earnings Wednesday amid soaring traffic to its popular Web site.

The No. 1 Internet directory earned $16.6 million, or 15 cents a share, in the quarter ended Sept. 30. Analysts surveyed by First Call Corp. had expected 9 cents a share. In the same quarter a year before, net income was just $681,000, or 1 cent a share.

Revenue was $53.6 million, nearly triple sales of $18.1 million for the same quarter in 1997.

The earnings were announced after the close of U.S. financial markets and couldn't help Yahoo's stock from plunging $10.44 to $114.38, as Nasdaq suffered heavy losses for the third straight day.

The company also announced that traffic on the Yahoo global network of properties increased to 144 million page views a day in September, compared with 115 million a day in June. A page view is defined as one electronic page of information displayed in response to a user request.

Internet traffic in general has increased substantially because of the Clinton scandal, and Yahoo has benefited as a popular portal to the Web. This in turn drives advertising Yahoo sells on its sites, which include a range of features from chat rooms to news and search services.

Yahoo shares have also more than tripled this year as the Santa Clara-based company further distanced itself from rivals and used its brand to challenge No. 1 online service America Online Inc. Yahoo has been adding features to broaden its audience and lure repeat visitors, allowing it to garner more revenue from advertisers and partners.

"They had another extraordinary quarter," said Derek Brown, an analyst for Volpe Brown Whelan & Co. He added that the Yahoo stock had a high price-to-earnings ratio because it's "the industry leader."

"Yahoo has the most business momentum going for it out there," said Ryan Jacob, a portfolio manager of the Internet Fund in New York, which owns shares of the company.

The company said its number of unique registered users rose to more than 25 million. This figure is considered important because it's the number of Internet users that register personal information such as their age, educational background and gender, which helps Yahoo define its audience.

Yahoo then can turn to advertisers and merchant partners and offer to send information on their products or services to users who fit in different categories, such as athletes or avid book readers.

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