PALO ALTO, Calif. – Shares of the Internet media company Yahoo! Inc. rallied 11.5 percent on Thursday as new signs emerged that the online advertising market, while still weak, may have finally hit bottom.
Analysts attending a number of media conferences this week in New York said they went in expecting the worst and came out pleasantly surprised.
"It's relative,'' said Safa Rashtchy, an analyst at U.S. Bancorp Piper Jaffray. ``One big advertiser told me they expected their advertising budget for next year to be flat with 2001. We had worried that it might be going down.''
"If overall advertising spending remains flat, online advertising will most likely be up, since it is still such a small part of the pie,'' Rashtchy said.
He said he believed this relative optimism helped fuel the rise in Yahoo shares, which enclosed up $1.89 to $18.95 per share. The stock has nearly doubled since early November.
Yahoo rose $1.96, or 11.5 percent, to $19.02 per share on Thursday. Analysts said the more optimistic sentiments may have also helped DoubleClick Inc. stock, which closed up $1.11, or 11 percent, at $11.13 per share. But other analysts said the mere suggestion that the ad market has hit bottom was not enough to justify a stock rally.
"Yahoo was overvalued to begin with,'' said W.R. Hambrecht analyst Derek Brown, referring to the stock's $11 range in November.
"The ad market may have solidified, but it solidified at a substantially lower level -- a far cry from the point where it would produced a meaningful improvement in Yahoo's results.''