Despite dire predictions that the Asian and Russian economic crises would drag down U.S. earnings, a number of portal companies are expected to post improved quarterly results next month, according to Wall Street analysts.
The only exception to the good news for portals is Lycos, which is expected to post a loss compared with the slight profit it reported a year ago. That is largely the result of costs of some recent acquisitions.
"[All the portal companies] had a pretty good quarter, so the question is whether they can keep the growth alive," said Henry Blodget, an analyst with CIBC Oppenheimer. "Their sequential growth will be very important."
In the coming two quarters, analysts say, Wall Street will be watching closely to see if portal companies actually benefit from the spate of deals they have struck recently, such as Infoseek's partnership with Disney.
Disney purchased a 43 percent stake in Infoseek in June, and the companies announced today that they will launch their portal effort, dubbed "Go Network," by the end of the year. (See related story)
"The landscape is starting to change to where you have some big [media] players channeling resources into this area. The question is how this really will turn out to be a competitive advantage for these companies," Blodget said. "We should see some impact from this in the fourth quarter, but the first quarter will be critical."
If there are no dramatic spikes for portal companies in the coming quarters, analysts cautioned that investors may need to prepare themselves for potentially slower traffic and revenue growth.
Daniel King, an analyst with LaSalle St. Securities, said investors will be particularly interested in how Infoseek fares once its deal with Disney takes hold.
King, who rates Infoseek as a "speculative neutral," said he would raise his rating only if the company improves its traffic numbers and grows its revenues. Infoseek has posted flat traffic growth while that of its competitors has risen.
Yahoo, which will report its third-quarter results October 7, is expected to post a profit of 9 cents a share, up from 2 cents a share a year ago, according to First Call.
Excite, which is scheduled to release its third-quarter results October 15, is expected to narrow its loss to 2 cents a share from 12 cents a share a year ago.
Infoseek is expected to cut its third-quarter loss to 6 cents a share from 17 cents a year ago, according to First Call. Infoseek is scheduled to report its third-quarter results during the week of October 19.
Lycos is expected to report a first-quarter loss of 7 cents a share, compared with a profit of 1 cent a share posted a year ago. However, the company will not report its quarterly results until mid-November.
Lycos, which has been on an acquisition tear recently, last month acquired net information service WhoWhere in a $133 million deal designed to bolster its portal presence. That move followed its acquisitions earlier in the year of community builder Tripod and home page builder Angelfire.
Keith Benjamin, an analyst with BancBoston Robertson Stephens, said in a report earlier this month that traffic TO Internet companies is expected to grow sequentially in the low to mid-teen percent range.
"We believe there could significant upside to our estimates for Yahoo," noted Benjamin, who expects Yahoo to post earnings of 9 cents per share for its most recent quarter. "We expect Yahoo's traffic in the September quarter will grow faster than that of its competitors."
Blodget, meanwhile, said he expects Yahoo to generate revenues of $45 million for the quarter, up 11 percent from the previous quarter. He also anticipates that the company will generate 132 million page views, up 15 percent sequentially. His earnings estimate on Yahoo for the quarter also is for a profit of 9 cents a share.
As for Excite, Blodget expected to see revenues of $39 million, an increase of 18.1 percent over the company's previous quarter. He said he expects Excite's page views to reach 50 million--a 15 percent sequential increase. In terms of earnings, Blodget expects Excite to post a loss of 3 cents a share.
Benjamin, for his part, said that while he expects Excite's traffic and backlog to grow following its investments in marketing and services, he remains concerned that the company has not been able to close in on Yahoo's "brand momentum." He said he expects Excite to post a loss of 4 cents a share, but believes there still will be some upside left for the stock.
Blodget estimates that Infoseek will generate an 11.1 percent sequential increase in revenues, to $19 million. He expects the company's page views to rise 9 percent over the previous quarter to 22 million, and anticipates that the portal will post a loss of 6 cents a share.
Benjamin, on the other hand, predicts that Infoseek could see a decline in traffic.
"We expect the transition to the Disney partnership may have distracted results for the quarter and would not be surprised by further declines in traffic," Benjamin said in his report. "The pending increases in marketing should help, but we remain challenged regarding the ability to manage such an aggressive, come-from-behind strategy, given the momentum of the leaders."
Lycos is on target to generate $22 million in revenues, up 15.8 percent sequentially, Blodget estimates. He added that he expects the company to increase its page views 23 percent over the previous quarter to 30 million, but to nevertheless post a loss of 7 cents a share for the quarter.
Benjamin also anticipates that Lycos will post a strong fiscal October quarter in revenue and traffic growth. Lycos's recent additions of personalization features, which were obtained through its acquisitions, are expected to drive the stronger revenue growth and traffic, he said.