I'm not the only one who doesn't quite understand investors when a company reports a sky-high earnings increase of 83 percent, yet the stock goes plummeting 13 percent because Wall Street expectations
were a penny more per share. The L.A. Times, wondering the same thing, asked analysts to break down why an 83 percent increase wasn't enough for Yahoo!, which yesterday reported net income of $683
million on $1.5 billion in revenue shares. Simply put, investors are holding Internet stocks to far higher standards than others--anything that doesn't match expectations at the very least is deemed a
failure in investors' eyes these days. The biggest factor was a slowdown in revenue growth, which the company warned could extend to 2006. To be sure, Yahoo!'s CFO noted the company will have to spend
more on technology and marketing in 2006 to attract more Web traffic, but another big factor is the expected loss of $50 million plus in search revenue from Microsoft, as Bill Gates and Co. ready
their own search marketing system.
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