Yahoo Predicts Steady Subscription Growth
Posted on: Thursday, 13 February 2003, 06:00 CST
source: Associated Press
By MICHAEL LIEDTKE, AP Business Writer
SUNNYVALE, Calif. - Yahoo! Inc. on Wednesday predicted it will add at least 1 million subscribers annually for the next three years as the Internet icon continues its comeback from the dot-com crash.
The company made the projections while offering more details about its recent financial renaissance during a daylong investment conference for analysts at its Sunnyvale, Calif., headquarters.
Executives' ebullient presentation contrasted sharply with the more circumspect mood at Yahoo's last "analyst day" in late 2001 when the company was on its way to a $92.8 million loss.
Yahoo bounced back last year with a $42.8 million profit on revenue of $953.1 million — a 33 percent increase from 2001.
The company reassured investors the momentum will continue this year as Yahoo makes further strides toward its goal of generating $2 billion in annual revenue by 2006.
Reaching that goal will depend largely on Yahoo's ability to continue to persuade Web surfers to pay for the new services that the company has developed in an effort to become less dependent on online advertising.
Yahoo ended 2002 with 2.2 million subscribers, up from 375,000 subscribers at the end of 2001.
Yahoo for the first time also disclosed that a partnership with SBC Communications to provide Internet access accounted for about half, or 1.1 million, of its subscribers at the end of 2002.
The rest of Yahoo's subscribers pay for a hodgepodge of other services, including deluxe e-mail packages and online matchmaking.
Yahoo executives said demand for high-speed Internet access through the SBC partnership has been particularly strong, which the company is counting on to meet its goal of adding 1 million subscribers annually.
During Wednesday's conference, Yahoo provided a preview of a new subscription service that will provide online video of sports and behind-the-scenes footage from popular TV shows such as "American Idol." Yahoo's video is expected to compete against a similar subscription package offered by RealNetworks for $9.95 per month.
If Yahoo hits its targets, the company should generate about $1 billion in cash during the next three years, said Susan Decker, the company's chief financial officer.
Yahoo already has about $1.5 billion in the bank, prompting one analyst to ask whether the company might consider following in Microsoft's footsteps by paying a stock dividend. Decker said the company is reviewing a dividend.
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