Yahoo! Inc, the internet content provider and portal site, has been named as heir apparent to MCI Communications Corp’s slot within the Nasdaq 100 index, the seat becoming vacant once MCI finally merges with WorldCom Inc. The Nasdaq 100 is simply a financial index which comprises the ‘top’ 100 non-financial companies listed on the Nasdaq National Market, ranked by market capitalization. But Yahoo!’s imminent inclusion shows just how fast and far its stock has risen since its initial public offe ring two-and-a-half years ago. Having debuted at $11, Yahoo! closed on Tuesday at $72, valuing the company at around $6.7bn. And despite the recent market turmoil which featured substantial declines amongst internet stocks, Yahoo! is next in line to join the top 100, said a Nasdaq spokesperson. All this when in the first half of 1998, Yahoo! achieved losses of $30m on revenues of just $70m. By comparison, MCI (which leaves the index because WorldCom is already included) had profits of $300m on revenues of $10.5bn over the same period. Inclusion within the 100 index is based purely on market capitalization, provided the shares achieve a minimum average daily trading volume of 100,000, plus the company must have been listed for a minimum of two years. The criteria differ markedly from an index such as the more diverse, and widely monitored S&P 500, which is more subjectively regulated to make it representative of the ‘top’ companies across all exchanges. At current prices, Yahoo! will represent just less than 0.7% of the Nasdaq 100’s total capitalization; similar in size to software provider, Peoplesoft Inc. The combined market capitalization’s of Microsoft Corp, Cisco Systems Inc and Dell Computer Corp currently constitute 41% of the Nasdaq 100’s value. The timing of the proposed changes to the index will be announced when available.
