Although Yahoo has not been able to catch up with the overall online advertising growth, this has not deterred the company from experimenting with growth areas. In the online advertising market, local marketing is one of the upcoming trends and has attracted players like Google, AOL and Facebook in addition to Yahoo. Here we will analyze the growth prospects of this trend and how it could benefit Yahoo in particular. We currently maintain $17.88 price estimate for Yahoo stock, which is about 6% above market price.
Yahoo (YHOO), which competes with Google (GOOG) and AOL (AOL) in the search business, is seeing a relatively stable profit margin of 42% since 2008 by our estimates, and we expect the margin to rise slightly over the coming years as Yahoo benefits from its partnership with Microsoft (MSFT). In 2009, Yahoo and Microsoft signed a deal whereby Yahoo will not only use Microsoft's search technology on its websites but will also keep a majority of the ad revenues. Yahoo is also making efforts to control costs by cutting its workforce, which should improve profitability in the short term.
- SINA (SINA) to overweight from neutral at Piper Jaffray.
- Texas Instruments (TXN), ON Semiconductor (ONNN), Xilinx (XLNX) and Valassis (VCI) to overweight from neutral at JPMorgan.
- Salesforce.com (CRM) to buy from hold at Canaccord.
- Peet's Coffee (PEET) to buy from neutral at Janney Capital.
- Invesco Mortgage (IVR) to overweight from equal weight at Barclays.
- BTU International (BTUI) to buy from hold at Wunderlich.
- Coca-Cola Femsa (KOF) to overweight from neutral at HSBC.
- Chipotle (CMG) to market perform from underperform at Morgan Keegan.
The U.S. online display advertising market saw a revival in 2010, with an estimated growth of 17% over 2009. Continued growth means greater competition amongst players like Yahoo! (YHOO), Facebook, Google (GOOG), Aol (AOL) and New York Times (NYT).
We currently maintain a $17.88 price estimate for Yahoo, in line with market price. Display advertising accounts for roughly 18% of Yahoo's stock value by our estimates.
- Polo Ralph Lauren (RL) to neutral from underperform at BofA/Merrill.
- Sigma-Aldrich (SIAL) to outperform from market perform at Leerink.
- Petrobras (PBR) to overweight from equal weight at Barclays.
- Silvercorp Metals (SVM) to buy from neutral at UBS.
- PROS (PRO) to buy from hold at Jefferies.
- Power Integrations (POWI) and Monolithic Power (MPWR) to buy from neutral at Roth Capital.
- Diodes (DIOD) to outperform from neutral at RW Baird.
- Whole Foods (WFMI) to hold from sell at Hapoalim.
- Sinclair Broadcast (SBGI) to overweight from neutral at JPMorgan.
- Sappi (SPP) to outperform from neutral at Macquarie.
- Alpha Natural (ANR) to buy from hold at BB&T.
- Watts Water (WTS) to buy from hold at Brean Murray.
According to the Wall Street Journal (subscription required), Amazon.com (AMZN) is launching a bulk email sending service aimed at businesses and developers. The goal is to expand its Web server services.
Amazon already has huge servers. The new email service is a way to gain added revenue. The service is called Amazon Simple Email Service (SES). The program offers a free usage tier, after which customers pay 10 cents per thousand email messages sent.
The Dow Jones Industrial Average lost 3.33 points or less than 0.1% yesterday.
Data on December new-home sales will be released at 10 a.m. ET. The latest statement from the Fed is due at 2:15 p.m. ET.
- BP (BP) to buy from hold at RBS.
- Symantec (SYMC) to buy from hold at Deutsche Bank.
- GenOn Energy (GEN) and Nationwide Health Properties (NHP) to buy from hold at Citigroup.
- Logitech (LOGI) and Patriot Coal (PCX) to neutral from sell, as well as ARM Holdings (ARMH) to buy from neutral, at Goldman.
- Silvercorp Metals (SVM) to outperform from market perform at BMO Capital.
- Cinemark (CNK) to equal weight from underweight at Morgan Stanley.
- Smith & Nephew (SNN) to market perform from underperform at Bernstein.
- Molex (MOLX) to overweight from underweight at JPMorgan.
The world of Internet traffic moves at lightning speed. So, too, do the moods and preferences of users. Back in 2007, News Corp's (NWS) MySpace was No. 1. Google.com (GOOG) took the No. 1 spot in 2008 and 2009. In 2009, Facebook has taken the No. 1 spot, with 8.9% of U.S. visits, edging Google.com, which had 7.2% of visits, Reuters reported, citing online measurement service Experian Hitwise.
Facebook was started by Mark Zuckerberg and a few classmates in 2004. Facebook users can create profiles with photos, lists of personal interests, contact details and other information. Users can communicate with friends and other users through private or public messages and a chat feature. They can also join interest groups and "like pages."
- RightNow (RNOW) to overweight from neutral at Piper Jaffray.
- Vivo Participacoes (VIV) to overweight from equal weight at Barclays.
- Genesis Energy (GEL) to outperform from sector perform at RBC Capital.
U.S. stock futures are trading lower Wednesday morning as investors are awaiting inflation and manufacturing data. Futures on the Dow Jones Industrial Average dropped 43 points to 11,378.00 and S&P 500 futures lost 5.50 points to 1,231.30. Nasdaq 100 futures dipped 9.50 points to 2,204.50.
U.S. stocks closed higher yesterday, with the blue-chip Dow index rising 0.42%.
The most recent layoffs are not that big or a surprise, as analysts have been speculating for the past few weeks that the company would reduce it payroll before the end of the year in hopes of breaking its recent financial woes.
Yahoo! is headquartered in California, a state that is already dealing with very high unemployment. These layoffs are going to add to California's current 12.4% unemployment rate, which is sharply higher than the national average of 9.8%.
Google (GOOG) has offered to acquire social coupon company Groupon for $5.3 billion and an additional $700 million earnout, according to Kara Swisher at All Things Digital, who quotes unnamed sources close to the deal. Swisher says the deal may be announced as early as Tuesday.
This deal would help Google improve its presence in the local advertising market and give Google access to a huge amount of data regarding consumer spending habits around the world.
- Intel (INTC) was upgraded to overweight from equal weight and Autodesk (ADSK) to equal weight from underweight at Morgan Stanley.
- Citigroup upgraded Blackrock (BLK) to buy from hold.
- 99c Only Stores (NDN) was upgraded to buy from hold at Deutsche Bank.
- PetSmart (PETM) was upgraded to overweight from equal weight at Barclays.
- Piper Jaffray upgraded Ruth's Hospitality (RUTH) and Morton's Restaurant (MRT) to overweight from neutral.
- BioMed Realty (BMR) was upgraded to market perform from underperform at FBR Capital.
- Wells Fargo upgraded Piedmont (PDM) to market perform from underperform.
Yahoo (YHOO) released third-quarter numbers after the bell on Tuesday, and they didn't do anything for the stock. Shares closed the regular session down 2.7% to $15.49. During the extended-hours period, I saw a quote go by of $15.53. That's right, the equity gained a measly four cents. Traders most certainly weren't applauding that performance.
Very recently, I wrote a bearish piece on the web portal. Since then, the stock has risen. Also, the company has been surrounded by some interesting speculation as of late regarding a potential takeover, with one theoretical scenario involving the owner of BloggingStocks, Aol (AOL).