Yahoo disappoints, Semel is in trouble

Yahoo! Inc. (NASDAQ: YHOO) today posted disappointing first quarter earnings. Chief Executive Terry Semel is in deep trouble.

The no. 2 search engine had net income of $142 million, or 10 cents per share, compared with $160 million, or 11 cents. a year earlier. Revenue rose 7 percent to $1.67 billion. Excluding payments Yahoo makes to partners, revenue was $1.8 billion. Analysts had expected profit of 11 cents and sales excluding so-called traffic acquisition costs of $1.21 billion, according to Thomson Financial.

Of course, shares fell in after-hours trading.

What can be said about the Sunnyvale, Calif.-based company that hasn't been said a thousand times before? The company is losing ground to Google Inc. (NASDAQ:GOOG) and needs to regain the confidence of Wall Street. I just don't see how Semel is going to survive.

The love-hate relationship between Wall Street and Yahoo had recently swung to the positive side. Yahoo!'s fans, including me, argued that once Project Panama got off the ground, the turnaround would begin.

RBC Capital Markets analyst Jordan Rohan, who rates Yahoo as outperform, summed up the situation well to Bloomberg News.

``Investors have confused the initial success that Yahoo has had with Panama with the overall company performance,'' he said. ``The company clearly is still in transition.''