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Yahoo! March 7 downgraded its financial outlook for first-quarter 2001 and announced that its chairman-CEO, Tim Koogle, would be stepping down, retaining the position of chairman. Yahoo!'s board of directors and senior management will be working with executive search firm Spencer Stuart & Associates to find a successor for Mr. Koogle. Yahoo! also announced a stock repurchase program.

Yahoo! blamed the downgraded forecast on a "weakening macroeconomic climate, and the resulting shortfall in marketing spending by customers due to the economic uncertainty." It predicted first-quarter 2001 revenues to fall between $170 million and $180 million. The Internet portal also said a switch in client focus from pure-play Internet companies to traditional marketers, which have a longer media planning schedule, was happening more quickly than it had anticipated, contributing to the decreased revenue.

Trading was halted on Yahoo! earlier in the day after the company canceled an appearance at a Merrill Lynch Internet conference the day before it was to take place. Trading was halted at $20.50, down 8.38% for the day.

In a client memo, Merrill Lynch analyst Henry Blodget had speculated that the news could have meant an impending early earnings announcement or a restructuring of management. In Yahoo!'s fourth-quarter financial call, the Internet portal had warned analysts the first quarter of 2001 would be flat for online ad sales.

Copyright March 2001, Crain Communications Inc.

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