COMMENTARY -- When Yahoo reports its earnings Jan. 10, it's likely that the company won't be able to say anything that will impress investors. At least Yahoo isn't alone -- other portals have even less of a chance to please Wall Street.
Merrill Lynch analyst Henry Blodget, like many analysts, expects Yahoo (Nasdaq: YHOO) to talk down its first quarter guidance, while hitting its fourth quarter numbers. Some analysts called for Yahoo to issue a profit warning last month.
Needless to say, it isn't the best of times for the leading portal. On one side, it's being hit by online ad worries. On the other side, the peanut gallery is screaming for a more diversified revenue stream. To shut up its critics, look for Yahoo to talk a lot about monetizing its user base. Last week, it started charging for its auction listings -- a good first step, but hardly a revenue bonanza.
Here's what to watch when the Web portals start unveiling results over the next few weeks:
According to earnings tracking firm First Call Corp., Yahoo is expected to report earnings of 13 cents a share on sales of $310 million.
Analysts said the outlook is everything. Blodget expects the company to project 2001 earnings to be in the 50 cents to 55 cents a share range, about 5 cents to 10 cents below consensus estimates. If Yahoo projects earnings of less than 50 cents a share, shares could fall below $20, said Blodget.
In addition, Terra Lycos will have to hand out guidance for its upcoming fiscal year. Toss in Terra's free ISP business and international operations and you'll have an interesting -- not to mention confusing -- earnings report. Watch the immediate reaction to Terra Lycos' first quarter as a merged entity. It may take time to sort out the results. One positive is that Terra Lycos is getting $1 billion in revenue from Bertelsmann. ABN Amro analyst Arthur Newman said Terra Lycos is likely to use recognized revenue from Bertelsmann to smooth out results in upcoming quarters.
Consensus: A loss of 21 cents a share on sales of $151 million.
"Excite@Home is trapped in the AT&T structure," said Newman.
Even analysts who remain relatively bullish are in a wait-and-see mode. William Blair analyst Abhishek Gami rates Excite@Home a "long-term buy," but admits there are a lot of clouds hanging over the company. All Excite@Home needs to do is clarify its 2001 outlook, pick its future CEO and announce its turnaround strategy for its faltering media operations, he said. That's all. Consensus: A loss of 9 cents a share, excluding goodwill, on sales of $188 million.
NBCI has a few issues -- dot-com exposure, a lot of barter revenue, low ad rates and significant upheaval. Consensus: A loss of 81 cents a share, excluding goodwill, on sales of $36 million.
Look for Disney's Internet arm to play up its relationship with Disney as well as hit sites such as ESPN.com. If Disney Internet Group shows some traction this quarter, it may bode well for future results. Shareholders deserve some good news. Consensus: A loss of 42 cents a share, excluding goodwill. TDAIN
• Yahoo's auction fees could pad earnings, bolster eBay
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