Yahoo! Beats The Street

Boosted by an exceptionally strong online advertising market, Internet portal company Yahoo! Inc. far surpassed Wall Street's estimates for the fourth quarter of last year. The company said it had earnings of $373 million, or 25 cents a share. Adjusted earnings were 13 cents a share; analysts had predicted earnings of 11 cents per share. Fourth-quarter revenues for the Sunnyvale, Calif.-based company were $1.078 billion, a 62 percent increase from the fourth quarter of 2003.

Terry Semel, Yahoo!'s CEO, attributed the good news largely to "a growing acceptance of online advertising with marketers who recognize its effectiveness and are therefore increasingly using this platform to reach their consumers."

Yahoo! pulled 119 million unique visitors in December, according to comScore Media Metrix. The company accounted for 31.8 percent of the Web searches in November, trailing Google's 34 percent, comScore reported.

Apart from ad revenue, Yahoo! gets paid for its subscription-based products, like its personal dating service, extra e-mail storage, and Internet access through its partnership with SBC Communications. Yahoo! subscription fee revenue was $104 million in the third quarter, or 16 percent of total revenue.

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Earlier this week, Yahoo! announced plans to expand its distribution capabilities via phone companies by signing a deal with Verizon Communications. The companies plan to co-brand an Internet access service expected by this summer--which is consistent with a larger Yahoo! strategy of convincing consumers to pay for premium features, such as personalized home pages, unlimited storage for digital photos, and two gigabytes of e-mail storage.

Separately, Bluestreak, a Newport, R.I.-based provider of online direct marketing services, reported its strongest quarter ever on Tuesday. The five-year-old company's annual online marketing revenue increased by over 25 percent from 2003, Bluestreak reported.

Bluestreak attributes the increase to additional work from existing customers, with average revenue per customer growing significantly by 70 percent from 2003 to 2004, according to Bluestreak. New customer acquisition grew by approximately 20 percent, it said. All sectors of the business saw an upward trend--with ad serving increasing 23 percent from 2003 to 2004, and e-mail marketing climbing by 38 percent in the same period, Bluestreak said Tuesday.

eMarketer expects the total online advertising market in the United States to grow 20.7 percent this year, to $11.3 billion.

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