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HolidayBuyer's Guide
Tech Industry

Yahoo sees profit in '98

Yahoo executives estimate that the company will turn a profit in early 1998.

SAN FRANCISCO--Delivering elaborate bar charts and graphs to investors gathered for a conference here, Yahoo (YHOO) executives estimated yesterday that the company will turn a profit in early 1998.

This expectation is fueled in part by fast-rising revenue growth and an increase in the number of pages viewed by Internet users. Yahoo, an Internet search service, earlier this week reported that it delivered 1 billion page views in the third quarter.

What do potential investors think of this? "It was one of the more exciting presentations I've seen. But while there's been a doubling of revenues, there's also been a huge increase in expenses. And the question is when will they will stop expanding their personnel and expenses and start taking profits," said Christopher Guinther, assistant fund manager with Bank One Investment in Westerville, Ohio.

He noted, however, that as long as the company's revenue continues to grow at its current pace, Wall Street will likely be patient for profitability until the first quarter of 1998.

Gary Valenzuela, chief financial officer, noted that Yahoo posted $3.3 million in revenues during the second quarter, nearly doubling the results posted during the previous quarter. The company made its presentation yesterday during the Montgomery Securities Investment Conference in San Francisco.

The service generates its revenues through advertising on its pages and Valenzuela noted that less than 10 percent of the revenues are from barter arrangements with advertisers. Yahoo had more than 230 advertisers in June, of which 50 percent were technology companies and the remainder were consumer companies.

However, it posted a $1.37 million loss during the second quarter after first-quarter profits shrank to $81,000.

The company is heavily investing to expand its geographic and demographic markets and forming new partnerships. Late last month, Yahoo launched a localized service in the United Kingdom and announced that it will provide more international guides in other languages.

"In the last six to nine months, we've started specific-branded media properties based on our navigational guide platform," said Tim Koogle, chief executive and president.