i'm a google bull. (nowadays, usually your on one side or the other: google or yahoo) but with that said, yahoo is now probably fairly priced. This isn't motorola, and panama does have growth prospects for the co. Upside, however, is limited in the near term. but no use shorting this. Might as well short nasdaq outright if you need to be short. It shouldn't be good for any of the bulls that this or ebay's (good) earnings were harshly viewed by the street. Ebay is barely up flat for the day. Maybe upgrades will move it. I'm seeing a pattern of some worth concerning predictive value on tech shares: - RIMM had a strong runup before earnings (even large gaps up on upgrades pre-announce). Hit 150 before selling off nearly 15% to 130 zone. Made all time highs. - YHOO - up 10% post feb-27. more importantly, up 20% from previous earnings calls on panama expectations. - EBAY - up 20% post feb-27. exactly my basis of shorting (its already pricy) by buying puts. and even though the report was great, it merely facilitated the stock to hold its ground. - GOOG - up 8% from post feb-27 date. DOWN 10% currently from last earnings. no real runup on expectations. constantly beaten down by news that doesn't concern primary revenue drivers... (youtube related woes (not a profit center), lawsuits, etc) goog has great last earnings, and may do very well considering their foreign currency exposure. Assuming the market doesn't crash in the next 3 days, I say GOOG has the best chance of holding its ground or even flying high. The point of the message? Buy beaten down shares with lower expectations and not much hype, especially stocks with lower PEGs at current, less vulnerable to selling, to go long into earnings. otherwise, short away. Momentum is for playing in between earnings; otherwise, figure this as a 'reset'.
I pulled a decent profit so i dont think i will regret selling. I may even play it awhile although not till google reports. YHOO will fall farther if goog hit big or if they miss. I am looking for a entry point around 27.50.
one last thing. look on the 10q's on sec edgar for goog vs yhoo. goog pulls 56% of revenues from US. yhoo is at around 67%. I bet if yhoo was 56%, they would have at least matched or beat earnings expectations based on currency alone.
interesting point on currency angle. don't forget that yhoo's equity take in various asian online operations is about 8 billion at todays value. and people often forget that yhoo is virtually a debt free company with good book value.