Jan. 18 (Bloomberg) -- Yahoo! Inc., owner of the No. 2 U.S. Internet search engine, probably will report fourth-quarter profit more than doubled, bolstered by surging advertising sales in Asia and Europe.

Profit likely rose to $158.9 million, or 11 cents a share, according to the average estimate of 27 analysts surveyed by Thomson Financial. Revenue rose 48 percent to $756.1 million, excluding ads that the Sunnyvale, California-based company sells and displays on other sites.

Chief Executive Officer Terry Semel doubled Yahoo's overseas revenue this quarter after making acquisitions in France and China to keep pace with Google Inc. Sales outside the U.S. will probably rise to $301 million, said Safa Rashtchy, an analyst at Piper Jaffray & Co.

``Last year was the first year that we became much more aggressive,'' in the effort to win international sales, Semel told an investor conference last week in Phoenix. We are ``not happy at all, but happier.''

Yahoo's stock surged 67 percent last year as investors bet the company will boost revenue and profit. That compared with a 9 percent gain in the Standard & Poor's 500 Index. Google shares have more than doubled since the company's August initial public offering.

``They are playing catch-up and they are very focused,'' said Walter Price, a fund manager at RCM Capital Management LLC in San Francisco, which owned 17.7 million Yahoo shares as of Sept. 30.

Semel declined to be interviewed for this story, Yahoo spokeswoman Joanna Stevens said.

International Focus

In the third quarter of 2003, Yahoo's international sales were about half those of Google's. By the third quarter of last year, Yahoo had closed the gap with sales of $251.7 million, compared with Google's $281.4 million.

In March, Yahoo agreed to buy Paris-based Kelkoo SA, a service that lets customers compare prices from different online merchants, for about $568 million in cash. It also agreed to acquire Chinese search engine 3721 Network Software Co. for as much as $123 million in November 2003.

Yahoo operates more than 24 country-specific Web sites in 18 languages that offer Web searches and services such as e-mail and instant messaging. They generate sales through display ads, ads linked to search results and subscription services such as online dating.

Auction

Yahoo sells its graphic display ads based on how many people may see them. In the U.K., advertisers may typically pay from 50 pence to 20 pounds (94 cents to $37.64) for each 1,000 consumers who see display ads, according to Keith Rattray, head of digital media for Carat, a London-based advertising agency.

Current Yahoo U.K. advertisers include British Airways Plc and Telewest Global Inc.

Yahoo uses an auction system to sell ads linked to search results on its sites. Advertisers in the U.K. may pay an average of 40 pence to 80 pence each time a user clicks on their search-linked ads, Rattray said.

Piper Jaffray's Rashtchy, based in Menlo Park, California, said he expects Yahoo will make acquisitions in countries such as China, India, Korea and Taiwan.

Semel, 61, received a salary of $600,000 in 2003 and in March was awarded options to buy 2.9 million Yahoo shares for $41.70 each, before a 2-for-1 stock split that took effect in May, the company said in regulatory filings.

Entertainment

Yahoo's CEO also made a $231 million profit from selling 8.06 million options in 2004, according to data from the Washington Service.

Semel is trying to attract Web surfers by offering more video and audio content on Yahoo's sites. The company completed its $160 million purchase of music-download service Musicmatch Inc. in October.

Yahoo has trailed Google in offering some new services. Semel's company last week released a program to scan personal computers for documents and e-mail, following Google, which released its own program in October, and Microsoft's MSN, which rolled out its version in December.

Google is leading its competitors in introducing some other features. In December, the Mountain View, California-based company announced it will offer full-text books and documents from four universities and the New York Public Library, which may draw students and other researchers away from Yahoo and MSN.

Yahoo accounted for 32 percent of U.S. Internet searches in November 2004, compared with 34 percent for Google and 17 percent for Microsoft Corp.'s MSN, according to ComScore Networks, which monitors Web use.

Ford

Advertising on the Internet is increasing more rapidly than traditional media such as broadcast television and newspapers. Advertisers spent $5.59 billion on Internet advertising in the first nine months of 2004, a 26 percent increase from a year earlier, TNS Media Intelligence/CMR said in a Nov. 29 statement.

Local newspaper ad spending rose 6.6 percent and network TV spending rose 14 percent in the same period, according to TNS, which tracks advertising.

Ford Motor Co., which buys graphic display ads as well as ads linked to search results on Yahoo, is among the companies shifting money to the Web.

The automaker spent more money on Internet advertising for the introduction of the Ford Super Duty Pickup Truck and Ford 500 Sedan in October and November than it ever has for a previous launch, Ford spokesman Miles Johnson said.

To contact the reporter on this story: Jonathan Thaw in San Francisco at jthaw@bloomberg.net.

Last Updated: January 18, 2005 00:21 EST