Yahoo, DoubleClick ‘Whisper Numbers’ Quietly Pessimistic

Yahoo Inc. and DoubleClick Inc. will report fourth-quarter results this week, and analysts who track the companies are making their usual predictions not found in any published forecast.

There’s a twist this time: Some of the so-called whisper numbers are more pessimistic than the published estimates.

Whisper numbers in the past were higher than official forecasts, and analysts used them to tell clients what they thought companies really would earn. Now analysts are hinting that results at Internet companies may fall short of official forecasts, causing shares of Yahoo and others to drop more.

It’s another indignity for online companies, whose shares have dropped 67% in the last year, as measured by the Bloomberg U.S. Internet index.

“People are bracing themselves for more disappointment,” said John Faig, an analyst with American Express Financial Advisors, which owns shares of Yahoo.

Whisper numbers often are more accurate than analysts’ forecasts. In 1999, a study of 101 technology companies’ earnings reports by Bloomberg showed that estimates on EarningsWhispers.com and StreetIQ, Web sites that track whisper numbers, were off by an average of 21%. Analysts missed by 44%.

Sites such as EarningsWhispers.com get their estimates from several sources, including analysts, company employees and investors.

Yahoo, the world’s most-used Internet search service, is expected to report fourth-quarter results today. Analysts polled by First Call/Thomson Financial forecast a profit of 13 cents a share. EarningsWhispers.com forecasts 12 cents.

However, Whispernumber.com, another Web site that tracks whisper numbers, expects Yahoo to report 13 cents a share, the same as First Call’s forecast.

DoubleClick, the top Internet advertising company, is expected to have a loss of 2 cents a share, First Call/Thomson Financial said. That compares with the forecast of a 3-cent loss, according to EarningsWhispers.com. The company plans to report results Thursday.

With online companies unable to raise more capital in the stock markets, many have slashed spending on advertising to conserve cash. That is hurting companies such as Yahoo and DoubleClick, which get most of their sales from Web company ads.

“Investors are one-sidedly pessimistic for the prospects for ‘dot-coms,’ ” said Jordan Rohan, an analyst at Wit SoundView. “There’s tremendous speculation that the company will warn or guide lower on the conference call” after it reports results. He estimates Yahoo earned 13 cents a share on sales of $320 million.

Officials at Santa Clara, Calif.-based Yahoo couldn’t be reached for comment, and Jennifer Blum, a spokeswoman for New York-based DoubleClick, declined to comment.

USinternetworking Inc., which delivers computer software for a monthly fee, is another company whose whisper number points to results that may disappoint investors. The company is forecast to report a loss of 52 cents a share, according to EarningsWhispers.com. That’s wider than the 49-cent loss expected by analysts polled by First Call. Officials at Annapolis, Md.-based USinternetworking declined to comment.

Not all of the unofficial estimates are downbeat. The whisper number for Dulles, Va.-based America Online Inc., the world’s largest Internet service, calls for a fiscal second-quarter profit of 15 cents a share. First Call’s estimate is 14 cents.

For years, higher whisper numbers implied that “the companies were reaching beyond their expectations,” said Daniel Peris, an analyst at New York-based Argus Research. “Now, the results are worse than expected, which is reflected in the whisper numbers.”

Still, Peris doesn’t put much stock in whisper numbers.

“Whisper numbers,” he said, “are worth what you pay for them, which is nothing.”