Yahoo executives said that chief executive Timothy Koogle will step down as soon as the company finds a replacement, and that earnings for 2001 would fall significantly short of previous estimates.
The company said that revenue for the first quarter of this year will be revised to $170m from $180m, adding that pro forma net income will break even. Yahoo blamed the revenue shortfall on the weakening economy and cutbacks in marketing spend among its customers.
According to financial analysts First Call, the figure is well below the $232m in revenue and per-share profit of five cents that Wall Street had expected.
Koogle, who will stay on as chairman, said: "All US businesses are facing challenging economic conditions that have weakened further in recent weeks. 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."
Yahoo halted trading on the Nasdaq exchange early in the day yesterday. The company's stock has gone nowhere but down over the last year, falling from an all-time high of $216 in December 1999 to $22.375 when it was suspended today.
Meanwhile, the company announced that it has initiated an external search for a new chief executive in an attempt to "bolster and augment the current executive management team".
Koogle made a brief statement at the beginning of a conference call with analysts saying that he is "personally committed to doing whatever it takes for Yahoo to be successful".
Chief financial officer Susan Decker said: "You should think of 2001 as a transition year for Yahoo. We should come out more stable." She added that the company plans to demonstrate its confidence by beginning a $500m share repurchase plan over the next two years.
Also joining in the conference call, Yahoo co-founder Jerry Yang said: "As the internet has become ubiquitous, so has Yahoo. We remain committed to what has brought us here."
Yahoo's regularly scheduled first-quarter earnings report is slated for 11 April at which time the company intends to provide updated fiscal year 2001 financial information.
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