Yahoo kept up the tradition of past quarters Tuesday, reporting earnings that beat expectations by a slight margin.
At the same time, the company reported that its audience reach more than doubled in the past year, growing to more than 120 million users worldwide in December.
In a report released shortly after markets closed Tuesday, the Mountain View, California, company said it earned 19 cents a share, or US$57.5 million in the last three months of 1999. Analysts, who often set their forecasts low, had predicted the company would earn 15 cents a share, according to a survey by Zacks Investment Research.
Jeff Mallett, Yahoo's (YHOO) president and chief operating officer, called it "the most successful quarter in our company's history in terms of record revenues and number of users and customers."
Company executives also announced a widely expected two-for-one stock split.
The announcements came on the heels of a decidedly bad day for Yahoo on Wall Street.
In anticipation of the earnings release, Yahoo stock fell sharply Tuesday. Shares closed at $395, down $41 dollars. Despite the relatively upbeat earnings report, it's likely Yahoo shares will drop further Wednesday, since the stock has typically fallen in the wake of its quarterly report.
Still, Yahoo stock has performed spectacularly in recent weeks. Over the last six months, Yahoo shares have more than doubled.
Because it is typically the first large Internet company to release its quarterly earnings, Yahoo serves as a bellwether for the rest of the industry. In past quarters, strong earnings reports from Yahoo have boosted shares in the overall Internet sector.
This time, Yahoo reported revenues totaling $200 million for the fourth quarter, more than double the $91 million from the same period last year.
Instead of focusing on the actual earnings, many analysts were looking to the report for an idea of what moves Yahoo will be making in the next few months.
Yahoo's earnings release comes as talk is swirling about its response to the megamerger announced Tuesday between America Online and Time Warner. That deal -- the largest acquisition in US corporate history -- has fueled speculation about a possible link-up between Yahoo and an established "old media" player.
Investors were also interested in finding out how well Yahoo fared in the all-important holiday shopping season. Although Yahoo gets most of its revenue through advertising, it has been expanding in the e-commerce arena.
Yahoo didn't say precisely how much it made through e-commerce in the fourth quarter. The company estimated that its users spent about $6.7 billion online, but completed only a bit more than 10 percent of their transactions on Yahoo shopping sites or affiliated merchants.
In a report released before the earnings announcement, Robertson Stephens Internet analyst Michael Graham cited international expansion as a key area where investors were looking for strategic signs from Yahoo.
Traffic to the company's Web sites from outside the US has risen dramatically in recent months, despite the fact that little money has been put into overseas promotion.
