As questions about Yahoo's future mount on Wall Street, doubters are probing another sore spot in the Web portal's operations: international growth.
Just as in the United States, overseas markets have been hit with an online advertising slowdown, and some analysts warn of other potentially more lasting problems.
International growth "has been inching up, but not as fast as everyone hoped," said Safa Rashtchy, an analyst at US Bancorp Piper Jaffray. "It is not significant enough to offset any major decline in the US market."
Adding to Yahoo's international troubles, two of its key managers in Europe and Asia, respectively, resigned within two days of each other. Savio Chow, head of Yahoo Asia, resigned last week to spend more time with his family. Fabiola Arredondo, managing director for Yahoo Europe, resigned the day before to pursue other business interests, according to a Yahoo spokeswoman.
The spokeswoman said the departures and the recent report will not sway Yahoo's international efforts.
"We've been really successful in our international expansion and have established the number-one position worldwide," the spokeswoman said. "We expect our growth to continue. We have significant depth and breadth in our organization to continue growing our market share worldwide."
But Wall Street is not as optimistic. Analysts said it appears the online advertising slowdown has seeped into Yahoo's international operations.
Last week, Lehman Brothers analyst Holly Becker issued a report detailing some concerns.
"In 2001, we do not expect to see meaningful growth outside the US," Becker wrote. "We understand that the online advertising market in Europe is experiencing a similar cooling off as the US, as advertisers are frustrated with the current effectiveness of the medium."
Traffic snarls
More than 40 percent of Yahoo's traffic comes from outside the United States and accounts for only 15 percent of its overall revenue.
On paper, it appeared that bridging the traffic-to-revenue gap would open the doors for strong growth. But Becker's report said international sales grew only 5 percent sequentially in the fourth quarter, concluding that Yahoo's overseas efforts were hitting the same obstacles as on the home front.
The difficulty in tapping revenue from overseas stems from the many variables not present in the United States. Most notably, consumer spending online in developing markets, such as certain Asian and Latin American nations, has not come to fruition.
