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Yahoo! Japan still in the clear

Analysts say Yahoo! Japan should not be compared to its ailing parent
Analysts say Yahoo! Japan should not be compared to its ailing parent  

In this story:

'Japan is different'

More dramatic expansion

RELATED STORIES, SITES Downward pointing arrow


TOKYO, Japan (CNN) -- While its U.S.-based parent is grappling with a sharp slump in online ad sales, Yahoo! Japan, the country's leading portal, remains in the clear.

Yahoo! reported a first-quarter loss on a sharp fall in revenue, with plans to cut its workforce by 12 percent. The portal company's net loss of $11.5 million has been attributed to the U.S. online ad slump.

One week away from its earnings release on April 20, Yahoo! Japan is already attracting strong earnings estimates from analysts who assert the company should not be compared to its ailing parent.

'Japan is different'

"I don't expect anything that we saw in the U.S. -- sales going down and job cuts -- in Yahoo! Japan. This is totally out of the picture," says West LB's Tokyo-based Internet analyst Ortwin Gierhake.

Yahoo! Japan, a joint venture between Yahoo! Inc. and Softbank, was not able to comment on its expected revenue performance.

"The first quarter is always weaker, but sales for Yahoo! Japan should still grow 15 percent quarter on quarter. Japan is different," Gierhake said.

"We can't compare the two companies even though they have the same name. They have different macro environments."

Analysts assert that the Japan online advertising market differs tremendously from the U.S. market.

The Japanese market for 2000 totaled $474.4 million, according to the Japanese advertising agency Dentsu. The group expects online ad revenues to surge to $786.4 million by the end of this year -- a figure that many analysts consider conservative.

More dramatic expansion

Whereas U.S.-based Yahoo! Inc. has seen the total number of advertisers on its site fall from 3,700 to 3,185 in the previous quarter, Yahoo! Japan controls about 15 to 20 percent of the total ad market -- a market that is slated for dramatic expansion.

The online surfing population in Japan is still much smaller that in the U.S. where Internet penetration has already exceeded 50 percent -- an indicator of more growth to come for Yahoo! Japan.

However, Deutsche Bank vice president Hideki Goto says that the grim portrait for the new media sector in the U.S. can have an impact on the Japan market as well.

"Sentiment in the U.S. market is influencing Yahoo! Japan revenues. The TV ad market is expanding and is very, very strong. But Internet advertising is not growing as fast. We believe that this is strongly influenced by the sentiment in the U.S," says Goto.

Neverthless, Yahoo! Japan, which started operations in April 1997, has been continually profitable since July 1997.

Analysts attribute the success of Japan's leading portal to its ability to leverage its parent's strengths in technology while concentrating on effectively monetizing its page views, bringing ABN Amro's Jahanzeb Naseer to call it "Asia's only investable stock."

"You get the feeling they have things a lot more under control than the other portals in the region," adds Naseer.

Unfortunately, the markets may punish Yahoo! Japan in the mean time. Its stock price is correlated with its parent and market pressure will continue until Yahoo! Japan delivers its results next Friday.

Yahoo! Inc. closed Wednesday down 16 cents to $15.86 on the Nasdaq. Yahoo! Japan traded higher at 5.46 million yen in Tokyo Thursday.



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Yahoo! trumpets more online music
April 5, 2001
Yahoo Japan sinks on parent's warning
March 9, 2001
Yahoo! Asia top exec calls it quits
February 19, 2001

RELATED SITES:
Yahoo! JAPAN
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