Good news from Yahoo has been as rare as teeth on a duck-billed platypus in recent months. The company releases earnings today. I'm hoping for signs of a turnaround.
Motley Fool is pessimistic:
Fellow Fool and CAPS All-Star Seth Jayson doesn't like the current management team here: "The boneheads running Yahoo! are looking to keep their jobs rather than do what's right for shareholders. They'll continue to screw up royal, and shareholders will eventually end up having to take a much cheaper buyout offer down the road."
Yeah, well all Jayson is looking for is short-term gains for shareholders that a buyout would bring. That says nothing about whether Yahoo would be a better company post-merger. I call that a bonehead opinion.
And who says management is only screwing up? Yang hasn't had much of a chance to make things better yet, but there are some good signs. First, Yahoo and Microsoft both gained share against Google in June, according to comScore. Yahoo gained 0.3 of a percentage point to captre a 20.9% share, while Microsoft's share rose 0.7 points to 9.2 percent.
But Microsoft's gain probably came because it's paying people to use its search engine. I call that a desperation move.
Yahoo's gain is organic. Plus, its ad deal with Google should start showing some results. It's holding off on implementing that pending antitrust review, but perhaps there was a small boost from their test of the program.
CNET notes that Yahoo is more exposed to the economic downturn than Google, because Yahoo relies more on display ads, which advertisers might cut back in a recession because you don't have demonstrable results. And CNET is right.
But CNET actually quotes an analyst who admits that long-term, the Google ad deal is probably better for Yahoo than letting Microsoft take its search business. Cowen analyst Jim Friedland:
"We believe that the Google partnership is the best choice for Yahoo, barring an acquisition of the entire company."
Neither is Google's disappointing quarter an indication of trouble in adsearchland. Lower interest income and legal expenses defending YouTube hurt the bottom line.
Analysts expect a 13% drop in earnings at Yahoo, so all it has to do is beat that estimate for things to look good. Wouldn't a stock price jump be nice?
With a compromise with Icahn in the works, maybe Yahoo can start getting some respect. a decent quarter among all the doom and gloom could do a lot to help, and perhaps put Microsoft -- which has been working hard to hit Yahoo's stock price in hopes of a fire sale -- in its place.
Go, Jerry!
UPDATE:
Yahoo just reported net revenues of $1.346 billion. FactSet Research says Wall Street was looking for $1.38 billion.Net income was $131 million or $0.09 per share. Street was looking for $0.10 per share. A little short there, Jerry.
Late in the day the stock had rallied a little after an early decline, although it didn't make it back to yesterday's close of $21.67. In after hours trading as of 4:52 pm EDT, it had gained $0.20 to $21.60.