This story was written by Keith Dawson for the Media Unspun email newsletter and is Copyright 2002 by Keith Dawson.

M E D I A   U N S P U N
Yahoo Up, Mallett Out
By Keith Dawson
18 Jan 2002

Yahoo posted its December numbers after trading hours on Wednesday. and the news was pretty good, considering -- the company beat Wall Street's expectations, losing only 2 cents a share. Yahoo stock rose in after-hours trading and shot up 13% on Thursday.

The routine earnings call to reporters and analysts was spiced by the news of the departure of Chief Operating Officer Jeff Mallett. Reporters barely raised an eyebrow at the company's spin that Mr. Mallet is leaving Yahoo "to take advantage of greater flexibility for family and business interests." The Wall Street Journal and MSNBC at least had the grace to put that bland explanation in quotation marks. These two outlets also both claimed that Mallett's departure had been widely expected after he was passed over for the CEO job last spring.

CNET reporter Jim Hu devoted the most words to the Mallett angle, leading off his tribute with "co-founders Jerry Yang and David Filo provided the spirit behind Yahoo, while Mallett supplied the guts." No reporter had a bad word to say about the man.

Everybody went over the company's announced numbers -- both the SEC-style "generally accepted accounting practice" numbers and the company's own preferred "pro forma" accounting. Unspun doesn't know why companies continue to get away with spinning their results to exclude bad news. It was almost a year ago that then-SEC chief accountant Lynn Turner christened pro forma earnings reports "EBS" -- everything but the bad stuff. Perhaps in the days post-Enron, this unlovely remnant of the dot-economy will finally be put to bed.

Writing for's Detox feature ("Know any companies that the market may be misvaluing?"), Peter Eavis witheringly deconstructed Yahoo's prospects for justifying its 200-to-1 price-to-earnings multiple in 2002. Eavis concluded, "The stock's up in after-hours trading. The mystery -- and the insanity -- continues." -- Keith Dawson

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