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Yahoo&#039&#039s downgrade bandwagon gets crowded

Yahoo (Nasdaq: YHOO) shares fell 4 percent Wednesday as both CIBC Oppenheimer and U.S. Bancorp Piper Jaffray added to the parade of downgrades for the company.

Shares of Yahoo, which has been hit by a spate of downgrades from analysts, shed 1.31 to 26.69.

At U.S. Bancorp Piper Jaffray, analyst Safa Rashtchy downgraded the stock to "buy" from "strong buy." The analyst also cut estimates for the company's fourth quarter and fiscal 2001.

In a research note, Rashtchy noted that fourth quarter revenue, cut from $320 million to $315 million, would be affected by sluggish e-commerce returns. Revenue for fiscal 2001, which was reduced from $1.462 billion to $1.395 billion, would suffer from slumping ad revenues, the analyst added.

Rashtchy did say, however, that the quality of Yahoo's revenues will be significantly higher in 2001, with contribution from Yahoo enterprise services and major national advertisers replacing dot-com spending.

Rashtchy said that, although much of the bad news has been priced into the stock, current economic uncertainties could drag on.

"As a result, we believe Yahoo!'s valuation will continue to be under pressure, as long as market uncertainty and potential economic slowdown are dominating the investor's minds," the analyst added.

At CIBC Oppenheimer, analyst John Corcoran downgraded Yahoo. He cut his rating to "buy" from "strong buy", lowered his 2001 revenue estimate by $35 million to $1.42 billion and cut his earnings estimate to 57 cents a share.

Corocan highlighted the company's exposure to the online advertising revenue slowdown throughout this quarter and next year. He added that there there doesn't seem to be any major catalysts for positive stock movement in the next several quarters.

Despite this, the analyst noted that Yahoo remains one of the highest quality companies in the Internet space, with solid control of core operations, a huge subscriber base, a solid financial position and outstanding management.