Yahoo! Issues Further Profits Warning

Fears of further fall-out in the dotcom sector re-emerged yesterday when Yahoo! issued its second profits warning in as many months. The internet company said it expects revenues for the first quarter of 2001 to be $170-180m compared to its previous target of $220-240m.

The group blamed the revision to its forecasts on a “weakening economic climate and the resulting shortfall in marketing spend by customers due to economic uncertainty”. It also highlighted a slowdown in the retrieval of revenues as the group begins to attracts more adspend from traditional advertisers with longer media planning cycles.

The portal, which is the largest in the world, looks set to announce a fall in revenues year on year and the company has said that it will be happy to just break even in 2001. It remains confident that the slump is short term however. Tim Koogle, chairman and CEO, said: “Yahoo!’s strong set of core assets will enable us to manage and execute through this short term environment and emerge stronger in the long-term.”

Looking to the future the group also announced recruitment plans for a new CEO to replace Tim Koogle, who is to remain as chairman. It is also to initiate a stock repurchase programme, in which it will acquire up to $550m of its outstanding common stock over the next two years.

ABN Amro said the news from Yahoo! highlights the deteriorating outlook for the US advertising market, particularly as it followed on from similar warnings earlier this week from Dow Jones, Knight Ridder and the New York Times.

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