Yahoo turns to corporate services for cash

Web giant Yahoo will unveil a new corporate portal service early next week, according to sources familiar with the plan.

As previously reported, Yahoo outlined the new offering in a private meeting with Wall Street analysts last month. Dubbed "Yahoo Enterprise Solutions," or YES, the service offers corporations a package of software tools for creating customized versions of Yahoo's Web portal.

The company plans to formally unveil the service as early as Monday, when it also is expected to reveal several corporate partners that will use the service, the sources added.

Yahoo declined to comment.

The Santa Clara, Calif.-based company has grown into one of the most popular destinations on the Internet by offering Web surfers a range of services, including news, free email, personal home pages, auctions and online shopping.

The company has so far relied heavily on advertising revenues and now wants to diversify its business. With YES, Yahoo will create something akin to a software sales division.

"They're looking at extending and broadening their revenue stream and getting into the potentially lucrative corporate arena," said Michele Pelino, an analyst at market research company The Yankee Group.

The importance of diversifying revenue streams was highlighted this week, when Yahoo's stock plunged on a report that its advertising sales may have lost some momentum in the second quarter.

According to a report released yesterday by Merrill Lynch Internet analyst Henry Blodget, the growth of Yahoo's advertising revenue has slowed because cash-strapped dot-coms are spending less.

Yahoo's stock yesterday dropped $11.13 to close at $131.69. The sell-off continued today as the stock shed $6.38 to close at $125.31.

According to Jordan Rohan, an equity analyst at Wit SoundView, the move toward the corporate market clearly underscores an attempt by Yahoo to decrease its reliance on advertising.

"Yahoo is trying to make an enterprise-level sale and, in doing so, reducing its risk from online advertising," Rohan said.

Sources said the service will allow companies to combine internal information with content and services from My Yahoo personalization features. YES will also use software that can extract information from internal corporate databases and convert it into HTML format to be accessed online, one source said.

Yahoo will sell YES to corporations based on how many users and how much tailoring of the service a company requires, sources said.