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October 7, 1998


By CBR Staff Writer

Yahoo! Inc tripled its revenues to $54m in the third quarter as advertisers increased their spending in tune with Yahoo!’s expanding array of free, on-line services. And the company claimed an average of 144 million page views per day during September, up 25% on June. But the management team was at pains to caution analysts and investors not to expect growth or profitability to continue at this break-neck speed. If short term financial expectations become too steep, warned Yahoo! chief executive Tim Koogle, the company’s longer term strategic flexibility might be hampered. Net profits at the Santa Clara- based company rose to $16.7m from $681,000 last year while revenues rose to $53.6m from just $18m last time. Revenues also rose by 30% sequentially in the quarter. But despite warnings from both Koogle and CFO Gary Valenzuela about overblown short term expectations, Yahoo! chief operating officer Jeffrey Mallett turned the open conference call into a back-slapping party as he reeled off and endless list of new services and categories in which his company now claims to be number one. Once the wave of hyperbole had subsided, however, some more interesting figures emerged. For example, only 40% of Yahoo!’s claimed 25 million registered users actually visited the site during the whole of September. And the company still derives a quarter of its pre-tax income from the interest on its $432m post flotation cash pile. And strangely for a company valued at over $10bn, it highlighted the launch of its free fantasy football team service as being among the most significant events in the quarter. However, advertising prices held steady in the period and the company said it continued to experience strong demand from its growing list of high profile advertising customers, although this is expected to ease over the seasonally slower holiday season when web usage traditionally falls. Yahoo!’s business plan is to continue to add quality content to its various on-line services by forging business relationships with other specialist content providers, Koogle said.

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