Profits at Intel, Yahoo Beat Wall St. Forecasts
Intel Corp. said Tuesday that its fourth-quarter earnings rose 18% to $2.1 billion, easily topping even the highest of analysts’ forecasts, while Internet directory service Yahoo Inc. handily beat Wall Street expectations with earnings of $18.5 million in the quarter. Yahoo also set a stock split.
The strong showings by both companies could add new fuel to the tech stock-buying frenzy, after a sell-off Tuesday before the results were announced.
Citing robust sales of all its product lines, Santa Clara, Calif.-based Intel said net income rose to a record $2.1 billion, or $1.19 a share, from $1.7 billion, or 98 cents, in the year-earlier quarter.
Revenue rose 17% to a record $7.6 billion, from $6.5 billion.
Intel’s earnings were far ahead of the $1.07 a share expected by Wall Street analysts surveyed by First Call.
The results even surpassed the “whisper number” of $1.10 a share circulated among traders following Intel’s news in November that its results would be higher than analysts were projecting.
The most recent analyst estimates for the quarter ranged from $1.03 to $1.15.
Intel said sales of its microprocessors--the brains of most personal computers--set a record and that overall revenue set records in Europe, the Americas and even in the depressed Asia-Pacific region, excluding Japan.
“Clearly, this was an incredibly strong quarter,” said Duane Eatherly, money manager at BancOne Investment Advisors, which owns Intel stock. “Also, we think they’re being classically conservative on guidance for the first quarter.”
Intel forecast that revenue in the current quarter will be down from the fourth quarter and that gross profit margin will be down “slightly.”
For all of 1998, 30-year-old Intel had net income of $6.1 billion, or $3.45 a share, down 12% from $6.9 billion, or $3.87, in 1997. Revenue rose 5% to $26.3 billion.
In Nasdaq trading before the earnings reports were released, Intel shares dropped $4.19 to close at $135.56 and Yahoo sank $12.50 to $402, amid a broad market decline that hammered many individual Internet-related names.
In after-hours trading, Intel was quoted at $139, while Yahoo was quoted at $395.
Santa Clara-based Yahoo said Tuesday that its earnings equaled 16 cents a share in the quarter ended Dec. 31. The results contrast with a loss of $1.9 million, or 2 cents a share, in the same period a year ago.
Revenue soared to $76.4 million from $26.6 million, as increasing visitors to its Web sites helped fuel advertising. The company’s sites include a range of features from chat rooms to news and search services.
The number of Yahoo advertisers rose to 2,225 from 1,950 in the quarter, the company said.
Excluding costs related to acquisitions, Yahoo earned $25 million, or 21 cents a share, easily beating analysts’ consensus estimate of 16 cents, according to First Call.
The results also topped the 20-cent prediction that was circulating on Wall Street just prior to the announcement.
Yahoo also announced a 2-for-1 stock split effective Feb. 8 for shareholders of record Jan. 22.
Also Tuesday, President and Chief Executive Tim Koogle was named chairman and CEO, and Chief Operating Officer Jeff Mallett was promoted to president.
“Yahoo is by far the best-positioned among the major portals,” said Ryan Jacob, portfolio manager of the Internet Fund, a New York-based mutual fund. Portals are Web sites that Internet users visit to navigate the Web and get a wide range of services such as free e-mail, stock quotes and news.
Yahoo competes with such firms as Excite, Lycos, America Online and Go Network, the newly launched Walt Disney-Infoseek site.
For the year, Yahoo’s registered users rose to 35 million from 25 million. Registered users are those who provide personal information to the company, such as age, educational background and gender. The data help Internet companies define their audience.
“The increase to 35 million is much higher than what we were looking for,” said Daniel King, an analyst at LaSalle Street Securities, who rates the stock “buy.”
Yahoo’s electronic commerce revenue in the quarter was about 25% of its total revenue, little changed from previous quarters, said Chief Financial Officer Gary Valenzuela.
The stock, one of the hottest in the Net sector, now is priced at 650 times the 62 cents a share analysts generally expect the company to earn in 1999.
“At least they’re making some money,” said Jim Balderston, director of Zona Research Inc., an Internet market research company in Redwood City, Calif., noting that most Net companies are still losing huge sums.
He said Yahoo’s profit report “is an encouragement not just for Yahoo, but for a lot of Internet stocks.”
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Lots of Mouse Clicks
Internet directory firm Yahoo’s revenue in the fourth-quarter rose more than 200% from a year earlier. Revenue each quarter, in millions:
Fourth quarter 1998: 76.4 million
Source: Bloomberg News
