• by July 8, 2004

Yahoo! reported second quarter earnings yesterday; revenues and net income rose nicely but the Internet giant's failure to exceed analysts' estimates sunk the rest of the 'Net sector.

On the Nasdaq, Yahoo! shares fell to $28.75, down 12 percent, in after-hours trading. Yahoo!'s news took Amazon shares down by 5.1 percent to $48.41 in pre-market trading, eBay shares slid 4.2 percent to $83.20 in pre-market action, and Overstock.com shares dipped 4.8 percent to $36.41 in after-hours action.

The share dips came as Yahoo!'s second quarter revenue fell nearly $2 million short of estimates. The company also revised estimates for third quarter revenues from $650 million to $610 million. No matter what the Street says, Yahoo! remains a powerhouse. I believe the share dips that resulted throughout the Internet sector are temporary.

Yahoo! Chairman-CEO Terry Semel told analysts and media on the company's earnings call to expect "some really cool" additions to the product lineup in coming months. Semel hinted at new wireless, travel, and personalization features; Yahoo!'s search interface and service is being re-tooled even as we speak. Yahoo!'s ad-related revenue represented 83 percent of its total revenue for the quarter-revealing strength in the brand advertising sector. Semel noted that the top 200 advertisers have re-up rates of nearly 90 percent with Yahoo!; he also anticipates that the company will exceed its 35 percent growth target for ad revenue this year.

With regard to Yahoo!'s Overture acquisition, the search company provided $609 million in search-related revenues, excluding commissions that Overture pays to partners.

So as the interactive sector sorts itself out on this day after Yahoo!'s second quarter earnings, there's some other news that bodes well, we think, for the overall health of the industry. Today marks the birth of the Interactive Advertising World Conference & Expo. MediaPost Communications, publisher of MediaDailyNews and your Online Minute, has teamed up with the Interactive Advertising Bureau to launch the new event September 20-21. The combined event, taking place during Advertising Week in New York, combines the best of MediaPost's annual "Forecast" conference with the IAB's "Advertiser Forum" to deliver a packed program and expo. We're excited about it, and we hope that you are too. For more information, click here.