SAN FRANCISCO (CBS.MW) - It's beginning to feel a little like 1999.
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Leading Internet stocks rose to fresh 52-week highs Friday, as some bet that next week's earnings, which will kick off with Yahoo (YHOO: news, chart, profile) on Wednesday, may suggest that expectations for Internet companies are beatable.
Yahoo rose 3 percent to $39.10, just shy of a fresh 52-week high of $39.18; Amazon.com (AMZN: news, chart, profile) struck a new 52-week high of $52.30. It gained 4 percent to 51.96 in recent trading. EBay (EBAY: news, chart, profile) gained 3 percent to $56.53. It's gaining on its all-time high of $58.93. InterActiveCorp (IACI: news, chart, profile) remains well below its 52-week high of $42.88, however. IAC traded up 3 percent to $34.95.
Online advertising is estimated to grow by double-digit growth in the first time in three years, according to Goldman Sachs. As for online retail sales, they grew 24 percent to $12.43 billion in the third quarter, according to BizRate.com. Goldman Sachs analyst Anthony Noto has also been upbeat about commerce for some time, as online shopping reached mass-market adoption this year.
Recent surveys and reports also underscore the continued growth in these businesses. In a recent Media Post and Insight Express survey, which was cited in a CS First Boston report Thursday, 54 percent of media buyers said they see demand for online advertising increasing.
All eyes on Yahoo
Kicking off the earnings parade, and shedding the first light on the health of the online advertising business, is Yahoo. The Sunnyvale, Calif.-based Internet media company is on tap to release its third-quarter report card next Wednesday, after the close.
Analysts surveyed by Thomson/First Call expect Yahoo to grow third-quarter earnings by 80 percent to 9 cents a share. Analysts also estimate quarterly sales at the media giant to grow by 36 percent to $337.83.
Importantly, investors will want some insight into how strong Yahoo expects advertising and commerce to be in the busy holiday season. Yahoo recently launched a new product search service for its Yahoo Shopping site. For the holiday quarter, analysts expect Yahoo to grow earnings but at a slower clip. Earnings per share are expected to grow 38 percent to 11 cents on sales that grow 31 percent to $373.69. For the full year, Yahoo is estimated to post sales of $1.3 billion this year, and $1.6 billion next year. But Yahoo is not expected to give an outlook for 2004 until January, according to Jordan Rohan, an analyst at SoundView Technology Group.
Separately, Yahoo and WebEx (WEBX: news, chart, profile) have formally released their combined Web conferencing and Yahoo instant messaging product. The companies announced plans for both companies to sell a joint communication product to their respective customers. WebEx's 8,000 existing customers can buy a corporate Yahoo IM service for $30 per seat, per year. Yahoo's head of enterprise solutions Steve Boom said that business is doing well, but that many corporations remain challenged in the current spending environment. Yahoo doesn't break out the financials for the enterprise solutions group, but Boom expects the WebEx/Yahoo IM product to account for 10 percent of enterprise solution sales within the next 12 months.
EBay and Amazon bunnies
As they typically are, EBay and Amazon.com will be the bellwethers for commerce on the Web. And, if recent history is any guy, they're likely not to disappoint.
EBay reports results on Oct. 16. The online marketplace operator is expected to grow earnings by 64 percent to 18 cents a share on sales of $519 million, up 80 percent from the year-ago period. Importantly, investors will want to know how EBay sees the fourth quarter. Currently, analysts expect EBay to grow earnings by 50 percent in the fourth quarter to 21 cents per share. Sales are also expected to grow at a fast clip. Analysts expect EBay to grow sales by 42 percent to $585 million in the holiday quarter, for a full-year revenue tally of $2.09 billion.
Amazon.com is expected to report quarterly results on Oct. 21. Analysts expect the online retail company to earn 10 cents a share, up from breakeven last year. Quarterly sales are expected to grow by 31 percent to $1.15 billion. Investors will want to get a sense of whether Amazon sees a strong growth in the holiday season as well. At the moment, Wall Street expects Amazon to grow sales by 24 percent to $1.7 billion. Profit in the fourth quarter is expected to grow 42 percent to 27 cents.
Other movers...
Small-cap names were also powered higher in Friday's action.
24/7 Media (TFSM: news, chart, profile) added another 3 percent, after gaining 10-plus percent on Thursday following an announcement that it's signed a three-year deal with FoxNews.com. Search stocks were also snapped up again. Ask Jeeves (ASKJ: news, chart, profile) jumped back over $19; FindWhat.com (FWHT: news, chart, profile) stayed well above $17.
Meanwhile, Chinese Net portals were also on fire, as short-sellers appeared to be covering ahead of the release of third-quarter results out of this group.
Sohu (SOHU: news, chart, profile) gained 3 percent to $33.38. Sina (SINA: news, chart, profile) added 3 percent to over $38. NetEase (NTES: news, chart, profile) shot up into the $60-plus range.
According to the Nasdaq site, the short positions in a couple of these stocks have hit the highest levels in the last 12 months.
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