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Yahoo! reverses slide as analysts cheer results

Yahoo! Inc. (Nasdaq: YHOO) reversed its decline Thursday after Wall Street analysts raised their earnings estimates for the Internet portal. Yahoo topped estimates in the first quarter.

Yahoo was up 3 9/16 to 169 1/8, after sliding to a low of 159 3/4 earlier in the morning. Yahoo missed the so-called "whisper number."

The company reported higher earnings and sales after the market closed on Wednesday.

The Santa Clara, Calif.-based firm said its earnings before unusual items totaled $63.3 million, or 10 cents a diluted share, versus $17.7 million, or 3 cents a share in the year-ago quarter, beating analyst estimates by a penny a share.

Revenue rose to $228.4 million from $103.9 million in the year-ago period and page views climbed about 34 percent to an average of 625 million per day in March.

Morgan Stanley's star Internet analyst Mary Meeker said Yahoo's "key metrics were awesome, again," and reiterated an "outperform" rating on the stock. Meeker also upped her revenue forecast for 2000 by 8 percent to $1.025 billion, and earnings estimate for 2000 to 44 cents from 38 cents a share.

Deutsche Banc Alex Brown analyst Andrea Williams Rice reiterated her "buy" on the company and said in a research note that the strength of the quarter in a seasonally slow period reflects Yahoo's increasingly international appeal and the power of its platform.

CS First Boston analyst Lise Buyer also reiterated a "buy" rating, noting Yahoo's sequential revenue and earnings per share growth. She noted the news that Susan Decker, global head of research at DLJ, would replace Chief Financial Officer Gary Valenzuela, who is retiring in July. Buyer said in a research note that Valenzuela had been key in building Yahoo's credibility with investors and Decker's lack of experience as a CFO adds some incremental risk.

CS First Boston and Donaldson Lufkin & Jenrette both raised their 2000 earnings estimates to 44 cents a share from 39 cents a share.

Chase Hambrecht & Quist analyst Paul Noglows also reiterated Yahoo as a "buy" and raised his second-quarter earnings estimate to 45 cents a share from 38 cents a share and his fiscal 2001 estimate to 56 cents a share from 49 cents a share.

He reported that he thinks the company will execute its core business very well, but because of its shares' high valuation, it is under pressure to leverage its leadership position by improving the monetization of its audience. Noglows expects the company to use its Internet currency and cash for acquisitions.

Yahoo! competes with other Internet portals such as America Online (NYSE: AOL), Lycos (Nasdaq: LCOS) and Excite@Home (Nasdaq: ATHM).

Reuters contributed to this report.