Yahoo! soars, lifts other Internet stocks

Yahoo! (Nasdaq:YHOO) destroyed analysts' expectations, returning a profit of $8.1 million, or 15 cents a share, on sales of $41.2 million in its second quarter.

Charles Cooper interviews Yahoo! co-founders David Filo and Jerry Yang.

First Call consensus expected the search engine firm to return a profit of 9 cents a share in the quarter. Even optimistic "whisper" numbers winding through Wall Street Wednesday only had Yahoo! earning 12 cents a share in the quarter.

Donaldson Lufkin & Jenrette analyst Jamie Kiggen maintained a "buy" rating on Yahoo! and raised his 12-month price target to $250 a share.

Yahoo!'s results gave other Internet stocks a lift. Amazon.com Inc. (Nasdaq:AMZN) added 8 13/16 to 115 15/16, Excite Inc. (Nasdaq:XCIT) rose 6 3/8 to 97 3/4, Netscape Communications Corp. (Nasdaq:NSCP) gained 2 1/16 to 39 1/8, and Lycos Inc. (Nasdaq:LCOS) was up 4 11/16 to 82 13/16. Yahoo! also announced a 2-for-1 stock split and has entered into an agreement for a $250 million private placement of common stock to Softbank Holdings, Inc., the majority shareholder of Ziff Davis, the parent of ZD Inter@ctive Investor.

"The cash gives us the freedom to fund growth," said Tim Koogle, Yahoo's CEO. "We want to be opportunistic and responsive to acquisitions."

Koogle said there are no immediate plans for acquisitions, but now Yahoo! has more flexibility to make a purchase. Yahoo! had $147 million in cash at the end of the quarter.

"It's just another fantastic quarter," said Derek Brown, an analyst at Volpe Brown Whelan & Co. "Once again, they've finished well ahead of all the expectations."

Yahoo!'s traffic improved to an average of 115 million page views per day in June, up from 95 million page views per day in March. Yahoo! ad rates per 1,000 views were steady at about $25.

The surprisingly good earnings report continues Yahoo!'s streak as one of the few Internet companies that consistently beats Street estimates. Many analysts had predicted that missing or merely meeting the consensus number would result in a broad-based Internet selling frenzy.

Yahoo! shares have nearly doubled in the past five weeks, surging from 100 in early June to a 52-week high of 207 last week. The stock was trading at 22 9/16 one year ago.

Last quarter, Yahoo! earned $4.2 million, or 8 cents a share, on sales of $30 million. In the second quarter of 1997, it lost $21 million, or 50 cents a share, on sales of $14 million.