Yahoo! beats Street again as sales, traffic surge

Yahoo! topped analysts' estimates again in its first quarter Wednesday, posting a profit of $63.2 million, or 10 cents a share, on sales of $228.4 million.

First Call consensus expected it to earn 9 cents a share in the quarter.

Ahead of the earnings report, Yahoo! (Nasdaq: YHOO) shares closed off 1 13/16 to 165 9/16.

The $228.4 million in sales marks a 120 percent jump from the year-ago quarter when Internet portal earned $17.7 million, or 3 cents a share, on sales of $103.9 million.

Including acquisition-related charges, employer payroll taxes on non-qualified options, and a $40,656,000 gain from the exchange of the equity investments, Yahoo! earned $77.8 million, or 13 cents a share, in the quarter.

"Our results in the first quarter continue to demonstrate that we have created a global service that resonates with users and a business with inherent self-reinforcing scale from which strong financial results can be derived," said CEO Tim Koogle in a prepared release. "We intend to leverage our powerful platform and aggressively extend our position as much as possible on all fronts as we go forward."

Once again, Yahoo! saw impressive growth in both unique visitors and daily page views.

In March, Yahoo! recorded 145 million unique users, including 14 million users in Japan. Its global registration base grew to more than 125 million cumulative registrations for Yahoo! member services.

Total traffic soared to 625 million page views per day on average during March, compared to an average of 465 million page views per day in December.

Yahoo! Japan's traffic, which is included in these page view totals, increased to more than 65 million page views per day during March from more than 39 million per day in December.

Merrill Lynch analyst Henry Blodget underestimated Yahoo!'s prowess this quarter, prediciting total sales of around $205 million and only a 9 percent improvement in page views to 505 million.

Its non-U.S. operations, excluding Yahoo! Japan, represented 14 percent of total consolidated revenues during the first quarter. The company's combined reach among home and work users was 61 percent in the United States during February, according to Media Metrix.

The company's plan to become the central market center for electronic commerce appears to be on track as it enabled more than $1 billion in online transactions in the quarter. Its Yahoo! Auctions site jumped to 2.5 million active daily listings, up from 1.5 million active daily listings in December.

Yahoo!'s expansion into other businesses means analysts should raise their margin estimates by 2 percent, CFO Gary Valenzuela said, during a conference call with analysts. The company's long-term model how assumes operating margins ranging between 32 and 38 percent, he said.

Separately, Yahoo! announced that Susan Decker, the former Global Head of Research at Donaldson, Lufkin & Jenrette will replace Valenzuela as CFO.

In the release, company officials said Valenzuela will retire and July and work closely with Decker through this transition period.

Perhaps Valenzuela, 43, retired because he was exhausted from continually downplaying Yahoo!'s potential.

Last quarter, Valenzuela said Yahoo!'s extraordinary growth rates were "unsustainable."

From an investors' standpoint, nothing seems out of the realm of possibility for Yahoo!.

Its shares soared to a 52-week high of 250 1/16 in January before announcing yet another 2-for-1 split in February.

"For 2000, we expect to see the stock move sideways through the summer and then rally to a new high at the end of the year," Blodget said in a research note. "Yahoo!'s core businesses appear strong and the company is successfully expanding into new arenas (wireless, devices, international). We continue to consider YHOO a core long-term holding."

Last quarter, Yahoo! earned $57.5 million, or 19 cents a share, on sales of $201 million.

Analysts expect it to earn 59 cents a share in fiscal 2000.

-- Sergio G. Non contributed to this report.