Thursday, July 9, 1998 Published at 00:10 GMT 01:10 UK
Business: The Company File
Yahoo! stuns investors
Soaring profits boost Internet stocks
The Internet directory Yahoo! has posted impressive second-quarter earnings well above analysts estimates.
Market observers had expected an operating income of around 9 cents per share, but Yahoo!'s profit was $8.1m or 15 cents per share. Last year the company had made a $300,000 loss in the same period.
The result comes as a boost to Internet stocks, which have already climbed to dizzying hights during the past weeks. Only on Wednesday did investors have second thoughts and massively dumped shares in this sector as they feared that their earnings expectations could be misplaced.
They have been proved wrong, at least with regards to Yahoo!, but the result won't see investors getting rich yet.
Yahoo! still has to come to terms with the costs of buying the electronic commerce software company Viaweb Inc. This acquisition cost $44.1m, and this charge translates Yahoo!'s profit into a second-quarter net loss of $36m, or 81 cents per share.
At the same time, the company announced a 2 for 1 stock split.
Nonetheless, the results can be seen as a boost for the fledgeling internet industry. During the past year, Yahoo! shares have tripled, reflecting the Internet directory's pre-eminence among the Web's search engines.
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