Yahoo will need to convert page hits into online product sales if it is to stay at the front of the Internet pack, a leading US high tech analyst warned following the company's results yesterday.
The portal supremo yesterday posted its second quarter results to 30 June, which showed a net loss of $15 million, on revenue up 156 per cent to $115 million over the same period last year. (see earlier story)
During the quarter Yahoo expanded its distribution through the acquisition of Onlineanywhere and Encompass and the integration of Geocities into its network.
The company now has 65 million registered users and last month averaged daily traffic of 310 million page views a day.
Internet analyst at Banc Boston Robertson Stephens in San Francisco, Michael Graham, said Yahoo had exceeded analysts’ expectations this quarter and was likely to retain its market leading position as long the Internet population continued to soar.
“The nice thing is they’re still a leader in a rapidly growing market - people are getting online in record numbers,” Graham said. “As long as the numbers go up, their core business will go up. Once this slows down, is when we’ll have to start seeing more ecommerce activity.”
Banc Boston has identified online shopping as the next major challenge for Yahoo. The bulk of the company's revenue comes from its 2,700 strong advertiser base and the company would need to work out the “right formula” for connecting retailers with customers in the long term, Graham said.
“Eventually we expect most advertisements on the Web will lead to a purchase,” he said. “Yahoo will be better off if they can turn their ads into purchases.”
Graham added that, despite this challenge, Yahoo continued to look like a long term winner in the highly volatile world of Internet stocks.
“People feel fairly safe buying the stock and they should be,” he said.
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