Yahoo hits the skids, ditches CEO
- — 09 March, 2001 09:41
Koogle will retain his position as Yahoo chairman, according to the announcement.
The consensus earnings estimate for Yahoo's first fiscal quarter was 5 cents per share, down from the 10 cents reported a year ago, according to analysts surveyed by First Call/Thomson Financial. On Wednesday, however, Yahoo said it would only break even in the quarter, which ends 31 March, on expected revenue of $US170 million to $US180 million.
In addition, analysts had predicted Yahoo would pull in earnings per share of $0.33 for its full fiscal year; however, the company's goal is now to break even for the full year also, Yahoo officials said during a conference call with press and analysts. One analyst pushed for a more precise earnings prediction for the full year, but Koogle declined, saying the tumultuous state of the North American economic climate made such forecasts too difficult.
During the call, Koogle blamed the rapidly deteriorating advertising market for the shortfall.
"All businesses in the United States are facing challenging economic conditions that have weakened further in recent weeks, and as consumer confidence and spending has deteriorated, a broad range of customers have delayed their spending across all media formats until their economic outlook improves," Koogle said, reading from a prepared statement. "As a result, we expect revenues and profits to be reduced most significantly in the marketing services area of our business in the first quarter."
Lacklustre interest in online advertising spanned both the dot-com and traditional markets, Koogle said. Companies pulled back spending due to uncertainty about the economy for the rest of the year.
Koogle decided to step down from his position as chief executive officer in order to pave the way for what he called Yahoo's next wave of growth. The company feels it can withstand its present troubles and rebound as the economy picks up. When better times return, Yahoo wants to be poised to attack once again, according to Koogle.
"I am dedicated to this business," Koogle said. "I want to state that for everyone. I am looking over the horizon and saying that when the economy starts to firm up, what do we need to have in place for growth in the next five to ten years?"
Christopher sees Koogle's departure as CEO as a natural progression for a company that is still maturing.
"They want to bring in someone who can get things done," he said. "I think it's healthy. These moves help achieve the critical balance between creativity and viable business approach."
Yahoo will continue to roll out new services for its more than 185 million consumer users worldwide. The company will also continue to sharpen its focus on services for corporate customers, as it has seen this segment of its business grow rapidly, officials said.
Fee-based services are the key for Yahoo's future, according to Christopher. The Internet by nature is far more cyclical than people expected, which makes it essential to have a good business base in order to survive. Strong fee-based services could attract corporate clients and help preserve Yahoo's prominent position on the Internet landscape as the economy recovers, according to Christopher.
"Yahoo does still face challenges, but they have a good product and organise information well," he said. "It is important to remember that the Internet is really still in its infancy. Yahoo will survive."