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Yahoo!'s (NASDAQ: YHOO) second-quarter earnings release, which was issued after the bell on Tuesday, didn't go over so well. Sales declined 13%. Adjusted earnings were 16 cents per share. That means that there was zero per-share profit growth on the bottom line. To add insult to injury, adjusted operating cash flow declined 10%.
In terms of expectations, Reuters is reporting a beat of two pennies based on Yahoo!'s reported income of 10 cents per share. No one really cared. The stock sold off in yesterday's after-hours session, losing over 3% of its value. This was on top of losing 1.5% during the regular trading session. A lot of shares were traded yesterday, too.
Apparently, the market wasn't so fond of the company's outlook. Quite frankly, after looking through the release, I don't see much substance in it. Cost controls are mentioned. The value of the Yahoo! brand and the company's offerings is highlighted. Big deal. Yahoo! is a struggling entity trying to recapture whatever it possibly can of its past glory.
Will that ever happen? Hard to tell. But you just know that the company would love Microsoft (NASDAQ: MSFT) to come back to the table and save the day. In fact, Jon Ogg recently mentioned that there was a little hope that some kind of search deal was in the offing.
You know what? I'm staying away from Yahoo!. It's not the vehicle I want to use to ride out the rest of the recession. I'm sure you can probably trade it, but it's not a stock I'd be comfortable with in terms of buying and selling. I think management is in a perplexed state at the moment; they have this great marquee name, and they just don't know how to leverage it. Maybe they'll happen upon the correct formula, but it most likely will be later rather than sooner. Yesterday's price action definitely tells an investor to be careful about this situation.
Disclosure: I own Microsoft; positions can change without notice.
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Reader Comments (Page 1 of 1)
8-14-2009 @ 4:32PM
fkh4783 said...
What's so good about Microsoft? It's embarassing the way it's CEO speak about what's he's going to do after they tie in to Yahoo. Don't know what will really happen. There was an article recently that two years ago someone suggested Yahoo merging with E-Bay. As a small shareholder of Yahoo I think it will be more promising for both Yahoo and E-Bay be together; Yahoo will not loose it's name which is known worlwide; you doing this just to please the many stockholder want this merger. I want Yahoo and E-Bay to be greater than what they are now, a zenith. I'm only a minority stockholder and loyal to Yahoo!