Q. I own shares of Yahoo Inc. I’ve heard that the company is restructuring to help increase revenues. What are the future prospects?
A. This well-known Web portal, scurrying to improve its bottom line by diversifying its services, is hoping to charge more in fees.
It has always attracted a huge and growing audience, but dependable profits remain elusive. No turnaround will be quick or easy in this difficult period for the Internet.
Yahoo (YHOO) shares are down 49 percent this year, following last year’s 86 percent plummet.
The company is eliminating 400 jobs, or 12 percent of its work force, as part of restructuring. Advertising revenue currently accounts for three-fourths of all of its revenue, but Yahoo wants to reduce that to one-half by 2004 as it gains income from other areas.
For example, it is teaming up with SBC Communications to package Yahoo content with high-speed Internet access. It is also expanding its classified listings and shopping business, while offering more for-pay online games and broadcasting services.
CEO Terry Semel, a former Hollywood executive who came on board this year, has cut the company’s 44-unit business structure to six broad departments . Some of its Internet sections, such as its Living pages, have been eliminated.
Despite those previously mentioned job cuts, 100 new positions will be added to the areas showing the most promise.
Stock of Yahoo is rated between a “buy” and “hold” by Wall Street analysts who track it, according to the Boston-based First Call research firm. That consists of three “strong buys,” seven “buys,” 13 “holds” and one “sell.”
Earnings are expected to be down 90 percent this year, versus a 47 percent decline for the overall computer industry. Next year’s forecast of a 45 percent increase compares to 27 percent for its peers. The firm’s projected five-year annualized growth rate of 25 percent beats the forecast of 15 percent industry-wide.
Yahoo and several other Web publishers, seeking to improve credibility with marketers, are introducing a single method to measure the number of people who see an advertiser’s message. Hopefully, this will overcome disputes about Internet advertising figures.
Meanwhile, the American Family Association, a Christian group, has accused the site as being one of the most active in allowing users to post offensive content advocating rape, torture and violence against women and children. Yahoo responds that it follows a “notice and take down” policy, in which users may call any questionable content to its attention for review.
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Andrew Leckey answers questions Sunday in Business and Tuesday in Your Money. Address inquiries to Andrew Leckey, P.M.B. 184, 369-B Third St., San Rafael, Calif. 94901-3581, or by e-mail at andrewinv@aol.com.
