For a company to "beat estimates", it has to have more revenue. Does the following passage sound like it will have more revenue at the next call? I believe this is all hype we see from yahoo. Panama, a mobile search application and dont forget, the unsubstantiated "buyout". They are attempting to jawbone the price up. Plus, senior management types have left and it will take time for the company to full reorganize. Its starting to sound a lot like Ford. ****************************** Earnings Nothing to Yahoo About: 24.15: Yahoo on Tuesday reported a drop in third quarter earnings, as increased competition for online advertising and stock option costs weighed on results. The Sunnyvale-based company also issued disappointing guidance for the current quarter, but said its new Web search system was complete, offering hope for a turnaround and prompting shares sharply higher in pre-market activity. For the latest quarter, Yahoo reported earnings of $158.5 million, or $0.11 per share, down from $253.8 million, or $0.17 per share. That was in line with analysts' expectations, according to Reuters Estimates. Third quarter revenue increased 19% to $1.58 billion from $1.33 billion last year. Excluding traffic acquisition costs, or the commissions Yahoo paid its advertising partners, revenue totaled $1.12 billion, slightly below the consensus estimate of $1.14 billion. The letdown for the quarter was expected. Earlier in September, Yahoo announced that a slowdown in automotive and financial services advertising would constrain revenue to the low end of its earlier guidance. Yahoo also provided a dimmed outlook for the current quarter, as it faces slowing growth rates and increasing competition from the likes of Google (GOOG), which is expected to report after the market close on Thursday, as well as sites such as MySpace and Facebook. The company forecasted fourth quarter revenue, excluding traffic acquisition costs, to be in a range of $1.15 to $1.27 billion. That compares with analysts' expectations for revenue of $1.3 billion. While it is still uncertain whether Yahoo's troubles are company specific or are a sign of broader weakness in the online advertising market, we would not be committing new money at this time. Shares of the company, which have traded between $23.80 and $43.66 in the past 52-weeks, fell about 23% in the latest quarter, and are down nearly 40% since the beginning of the year.
there is no buy-out...that was a rumor that was floated in 06, however, the ceo may leave in Q2 or Q3....which is more likely, I didn't say he will leave. i'm not intending to get into a pissing contest with you so please don't mis-interpret what i am going to say......with all due respect i am VERY famliar with yhoo, probably much more then you, or most other traders as well. finally, YHOO is a special case for me, i have a large core position that i trade around, but will hold some shares for the long-term.
The "buyout" trick is funny. It usually happens when the stock price reaches such a low that analysts have no other option but to throw out the "this company is going to get bought out" rumor. I can point out quite a few lousy companies like Gateway or Marvell where this balloon was seemingly floated. For Marvell, it was floated when the company was in the 16s. For Gateway, it was in the 1s. However, both these buyout rumors were followed with actual press releases and recaps on "The Fly on the Wall". Let me guess, the buyout rumor for Yahoo was floated right when it reached its 52 week lows at 22.65. In a search on GOOGLE, I found that this rumor was nothing more then something created in the blogosphere. Just another yahoo message board pump/dump scam. If Yahoo is a shrinking company with a year over year growth of negative 37.5%, why would anyone pay the current price for this thing for a long term trade. This company is just a trade, nothing more. This is exactly why Fidelity kicked this company to curb cashing out some 65 million shares. Why would they want to pay this much for a shrinking company with a forward P/E of 49 and change? On the other hand, Google has a forward P/E of 36 and a growth rate of 92.4%. Although Yahoo is cheaper in PPS, its really a whole lot more expensive then Google. As Google catches more of the market, Yahoo will flounder about like Earthlink further shrinking in shareprice by the day and week. As they run out of cash (only 2 billion left from the tech years), the company will linger further booting and firing more of the senior management and ultimately ending up being the next Gateway with the share price in the 2s. http://www.google.com/search?hl=en&q=yahoo+buyout You have to thank Don Brite. If it were not for his traders, then this thing wouldnt be at the price where it is at now. It comes down to a bunch of prop traders in a fishbowl. Obviously Fidelity, the largest mutual fund company out there, has just said no. So its off to the prop traders and retail crowd to buy up all the rest of those 65 million shares that Fidelity left in the dumpster behind Target.
hangingman, you make some good points, but i'm wondering how a company that has positive cash flow with 2B cash (almost 3B when you add in cash equivalents) in the bank can run out of money so quickly as you say? yhoo did spend a pretty penny building out their new media center in LA last year, but beyond that they are not spending more then usual. yes, fidelity dumped shares, but i'm sure you know that insitutions are not perfect and can make bad moves too. i've seen it many times...i'm sure you have as well. i didn't know about Bright's prop traders buying in though, that's new info to me. thanks. despite short-term trends, there's no denying that YHOO is here to stay. the Street's current pessimism might translate into opportunity for long-term investors. many of my best performers have worked that way.
I believe the internet is big enough for both Google and yahoo to be successful. Google is a bit richly priced at this moment compared to Yahoo. In any case, there is the REMOTE (note: i said remote) possibility that MSN/AOL might buy over Yahoo in their losing battles against Google.
Huh? The advertisers pay Google, then Google pays some websurfers to go and click on those ads. Then Google shows the advertisers how great they are because they got all those clicks and blah blah blah. Makings of a scandal, if you ask me. But I did not really expect you to figure that out being that you rely on Wall Street analysts to form an opinion on Yahoo.
There is a dirty little secret at GOOGLE and Hydro is partially onto it-- Click Fraud in the worst way. I use GOOGLE for just about every search I do they are simply the internet phonebook. But phonebooks are free and if you're like me you have never once clicked on an advertising sponsored link on GOOGLE. How then are they making money off me? I don't get it. All there other little sideshows are a joke GOOGLEMAP whoopdi do! if I ever want a space shot of a volcano I'll keep it in mind. GOOGLECHECKOUT or whatever I've never used, when they merge the sponsored links in with the others and bump some unnaturally to the top- then I'll understand their marketing plan and then I will move on to another free search site. As to yahoo it is for me insignificant. occasionally I'll run across a stock message board there and it's filled with armatures- other than that I never use yahoo for anything. Amazon I buy quite a few things through- can't understand why things aren't going smoother there & EBAY for all it's knocks is a transformative web site.
ginux, Panama wasn't fully released until 07. Semel announced a partial release last earnings announcement, but to astute listeners of the conf. call in Oct, it was only the front end that was released and not to all ad clients, the platform wasn't fully released until 07. so revenue upside from panama won't really show up until Q1 earnings announcement in April. however, i believe that yhoo will still beat expectations (my bet is by 25% or moere) for Q4 when they announce on 1/23. when yu add the panama rev. moving forward there is a lot of upside potential. panama is huge....even if yhoo doesn't sell more ads, it will get much more rev. from existing due to more effecient monetization of search clicks. basically, it is fattening the margin.