Yahoo's Semel looks beyond advertising for revenue

Yahoo Inc Chief Executive Terry Semel is relying on a new team of advertising salespeople and help-wanted ads to spark growth this year at the money-losing group of Web sites.

After consolidating Yahoo's business units to six from 44, Semel also is developing fee-based consumer services, such as online music sales, to counter an advertising slump that cut revenue by 35 percent last year for the most-visited destination on the Internet and produced a US$93 million loss.

Some predict Semel has a good chance of meeting a commitment he made in January to boost sales by 5 percent to 12 percent in 2002. They point to his purchase in February of HotJobs.com, the second-largest job-posting Web site, and his joint venture formed in November with local-phone company SBC Communications Inc to sell high-speed Internet access.

"He needs to move more people to paid services from free," said John Faig, an analyst at American Express Financial Corp. "I was skeptical in the beginning, but I think he's moving in the right direction." American Express held 522,640 Yahoo shares in December.

Semel, former co-chief executive of AOL Time Warner Inc's Warner Bros film studio, replaced Tim Koogle at Yahoo. Yahoo's sales decline began under Koogle as the US economic recession cut advertising sales and hundreds of Internet companies that had bought ads on Yahoo's Web sites went out of business.

"Yahoo is really positioned for much greater growth starting this very year," Semel said at an investors' conference in January.

Semel, who was paid a salary of US$254,853 last year and given options to buy 11 million Yahoo shares, declined to be interviewed for this story.

In January, Yahoo forecast first-quarter sales of US$160 million to US$180 million, excluding expected revenue from HotJobs.com. A year earlier, Yahoo reported quarterly sales of US$180.2 million.

The company also forecast expenses between US$50 million and US$100 million to reflect a change in accounting rules governing how companies value acquired assets. The writedown of "goodwill" will create a first-quarter loss of US$65.2 million, or US$0.11 a share, Morgan Stanley analyst Mary Meeker predicted last week. A year earlier, Yahoo posted a loss of US$11.5 million, or US$0.02 a share. Excluding the accounting change and some other expenses such as payroll taxes on employee stock-option gains, Yahoo forecast profit of US$0.01 to US$0.02 a share.