Yahoo! Conference Call Notes
1. After Panama launched on Feb. 5th, Yahoo said Revenue per Click (RPC) dropped due to the pricing change, but recovered a few week into the launch. According to Sue Decker, the RPC is now inline and improving. Yahoo! expects to see continued improvement on the second half of the year.
2. The Q2 guidance is only 1.2% sequential growth (compared to last year). Most Analysts view this to be very weak.
3. The newspaper deal appears to have great potential, but Yahoo! does not expect to see much revenue in the short term. This represents a shift in their strategy. No longer just about selling on their site, but moving to off site network.
4. Revenue from display advertising used to be mainly from their top 200 advertisers. Today, it is better represented throughout the customer base.
5. Panama rollout underway in Korea and Japan. All advertiser have migrated to Panama.
6. Monetization is down 7%, but the RPC is actually improving. This essentially means they are displaying fewer ads, but these ads are generating more money.
7. Yahoo! Checkout with Ebay launching today. This is interesting. Maybe this is just a prelude of what is to come. Perhaps YHOO/Ebay merger?
8. Some comments on the Double Click acquisition by Google. Semel say it is a validation that display advertising is important.
9. Expected revenue for search in Q2: Expecting double digit increase, growth should come across the board and expecting this trend to increase.
10. CFO search still going on, Semel said he is excited and should have announcement in a few weeks.
Bottom line, YHOO continues to disappoint. Google (GOOG) continues to dominate search. To be fair to Yahoo, they did indicate investors should not expect much this quarter since their new ad system needs more time. However, nobody expected them to miss the bottom line given the bullish tone from management just a few weeks ago. We have been a big believer of Yahoo, but another quarter of dismal result is making it tough to stay positive. We still believed this stock has great potential, but in the short term, it will be painful. Buying more if this stock touches the mid 20s.
Comments
But ibooyah.com did proclaimed yahoo as the stock of the year. what happen now?
Posted by: Ron Mexico | April 17, 2007 06:09 PM
Yes, we did proclaim yhoo as the stock of the year. For a good while, it was doing really well, up 25% from the start of the year. Hopefully it will recover as there are still 3 quarters left.
Posted by: iBooyah | April 18, 2007 06:34 AM
Hey Guys! Sorry about Yahoo! Anyone who is long the market has to be disappointed and concerned about this earning's stumble. In retrospect given that you follow this stock so closely could you have seen this coming? Below is a post from another blog. I cannot say I agree with the poster's opinion but it certainly is provocative. What do you think?
"Yahoo came in with such high expectations and they were not able to materialize any value out of Panama- They will continue to get crushed by this market as investors were really looking for results. I dont see Yahoo in business 3 years down the line and at these levels, there is great short potential. I was definitely discouraged reading the headlines of Bloomberg- about how they couldnt be more pleased with panama, they couldnt be more pleased with being "right inline", and that there is more to do.. Realistically, these expecations for yahoo were unfound but when guys like Cramer and Crap Money on CNBC parade junk like this for gold, it does provide a solid technical boost, as did the misleading impression that they were catching a google. Even with this cheapening of Yahoo, I still like entering a butterly of Long GOOG against EBAY and YHOO. Or prefer to not like any of these on their own...
As for Intel and IBM, i think there are alot of people out there looking for the death spiral on tech and they may very well see it soon. There is too much inventory out there and despite some of these companies trying to hide it, there is no way the world doesnt have a major surplus of memory chips and IPODs.. LRCX managed to beat and keep "on track" with their downgraded 07 estimates.. but honestly retailers wont bite the bullet forever and there is definitely some pain to be felt for IBM and INTC."
Posted by: Stock Detective | April 18, 2007 08:36 AM
Thanks for the post, stock detective. Yes, very much disappointed in Yahoo. As far as Yhoo going out of business in 3 years as posted by some blogger, that's too extreme. The tech sector moves so fast that predicting what will happen in 3 years tough. In our view, in 3 years, the landscape will definitely change, but highly doubtful Yahoo will be out of business.
Posted by: ibooyah | April 18, 2007 08:50 AM
I remembered last year when I sold yahoo for around 27. I thought they weren't going any higher but they did reach 30's by the end of the year. Every analyst were saying they are losing too much ground against google in the ADs revenue.
They need a new direction and restructure all their sites to look similar to each other. The new wait is to see if their new AD service can be as profitable as google one.
Posted by: shraz | April 18, 2007 09:09 AM