Internet media company Yahoo! (YHOO) posted pro forma Q4 EPS of $0.13. The company lowered its revenue and profit outlook for 2001. ABN Amro downgraded its investment rating on the shares to reduce from hold.
Analyst Arthur Newman says Yahoo's 2001 outlook appears to be significantly worse than feared. He views the 5% sequential revenue increase in Q4 as disappointing, and does not see the trend turning around until Q3 of 2001, at the earliest.
Newman cut his $0.57 EPS estimate for 2001 to $0.38 and his $1.38B revenue forecast to $1.17B. At current levels, he believes the company still commands a substantial premium to other investment opportunities, which he expects it to rapidly shed. The analyst thinks the company could be appropriately valued "in the low teens." Given the downside potential -- and the lack of any catalyst for the foreseeable future -- he downgraded the shares.