Yahoo expected to shine in 3Q

Blodget's estimates are in line with consensus: revenue of $137 million, earnings of 9 cents a share, operating margin of 25 percent, 357 million page views per day (up 15 percent sequentially), and about 90 million unique visitors. But, he said revenue could be as much as $150 million, which would represent 17 percent sequential growth versus 29 percent last year. Bottom line earnings could 11-12 cents a share, said Blodget.

The Merrill Lynch analyst said he believes international operations, which last quarter contributed about 30 percent of Yahoo's traffic could provide as much as 5 percent upside to his estimate of 15 percent total sequential growth.

Blodget also emphasized the strength of Yahoo's international operations in comparison with its peers. International operations are now generating 30 percent of users and traffic, but only 10 percent of revenue. Yahoo is the number one portal in France, Germany and the U.K., and owns a 70 percent stake in these businesses. Yahoo Japan, at 30 percent ownership, is the only minority owned subsidiary.

Blodget reiterated his "buy" and his $225 price objective on Yahoo shares.

Rashtchy's official numbers are $139.1 million for revenue, and 10 cents a share on earnings, but he said he expects Yahoo will do significantly better. "People were expecting Yahoo to have an okay quarter, but they should have a great quarter and significant upside," Rashtchy said in a telephone interview. He also expects operating margin to be slightly higher than the 28.5 percent he has forecast.

"Auctions and e-commerce will be a hot topic during conference calls," said Rashtchy, who expects Yahoo will talk a lot about e-commerce for the upcoming quarter.

Preissler has a revenue estimate of $138.6 million and earnings figure of 10 cents a share, but believes "a 10 percent increase in revenues could be within reach for the company, bringing revenues to $141.4 million"

Higher earnings, as much as 11 to 12 cents a share, could result from upside on the revenue, but could also some from the operating expense side, where Preissler admits having been conservative on including the Broadcast.com acquisition.

Because investors are trying to stay one step ahead of the trends -- and the herd of retail investors -- Preissler said he sees pressure on Yahoo shares for next couple of weeks. Shares of Yahoo are up about 50 percent from its most recent trough on August 4. Anticipation of another solid quarter, the back to school shopping rush, and seasonally improving usage metrics, and continuous good news flow are all contributing to the pick up, Preissler wrote in a report.

Yahoo has repeatedly beaten estimates typically by 10-20 percent. Of the last 10 quarters, shares of Yahoo peaked on or up to three days before reporting date eight times. Of those eight times, Yahoo shares declined between 9 percent and 36 percent following the earnings release. Worthy of note is that the peak in stock price has occurred before the earnings release in each of the last five quarters.

While there has been no formal announcement, he believes Yahoo has been increasing ad rates across its inventory. Looking toward next year, the increase will end up being greater than prior moves, maybe closer to double digits than single digits on a percentage basis. For the next two quarters, Graham said he is "highly confident about Yahoo's rapid growth rate."

For the December quarter, Graham anticipates the company may finally have fixed its commerce strategy, enabling it to capture more holiday shopping dollars in its new mall, which includes more branded stores and improved merchandising.