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Yahoo reports a weak quarter, but refuses to believe that its yearly financial plan is off course

It’s been a turbulent last year for Yahoo. Between the failed talks with Microsoft over a wholesale acquisition, the renewed interest by the company in buying only the search engine portion of Yahoo, and most recently the ceding of part of the board seats to Icahn and his group of insurgent investors, Yahoo has had plenty of distractions. These distractions have overshadowed to some extent the deep trouble the company continues to be in as it leaks profit and marketshare.

While Yahoo is still an internet giant and sees tremendous traffic, it has fallen on hard times. An advertising deal with Google and a major reorganization of its upper level management were not enough to entirely turn things around, as indicated by the metrics on the latest earning report.

In Q2 2008 Yahoo saw its net income fall from $161M USD in Q2 2007 to $131M USD this year, a drop of 19 percent. The gross revenue fared better rising 6 percent to $1.798B USD. However, even this one strong spot was the sign of some investor griping. The revenue from sites carrying Google ads amounted to $1.35B USD, an 8 percent rise. Investors were disappointed as they expected at least $1.37B USD.

Despite the bad news on the profits front, Yahoo Chief Financial Officer Blake Jorgensen refused to change its outlook for the coming quarters. This move was characteristic of the company which some label as stubborn and others label as determined. Mr. Jorgensen alluded to the revenue rise, stating, "We are pretty pleased (with results), relative to both the distractions and the economy."

Jeffrey Lindsay, analyst at Sanford C. Bernstein is not optimistic on Yahoo, but says that at least it doesn't have to worry about exceptionally high expectations. He states, "Investors braced for the worst ...These results are poor, but relative to what people were expecting, they're not so bad."

Yahoo did indicate that it has not ruled out looking at a sale to Microsoft as a means of alleviating its struggles. Yahoo Chief Executive Officer Jerry Yang stated in a conference call, "We have looked at just about every alternative you could imagine as far as looking at how do we best position the company to go forward either through transactions and/or financial options."



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This article is over a month old, voting and posting comments is disabled

So, to try to remember my original post...
By Motoman on 7/23/2008 10:44:30 AM , Rating: 5
...which may have been a bint ranty, but...

These yahoos (heh) on the board have royally stuffed themselves, and the company. The shareholders have every right and absolutely should toss all the board members out on their dumb asses...the boards "options" at this point amount to precisely #@$%-all. I have no love for Microsoft, but screwing up that purchase offer is one of the all time greatest business blunders. Sheer stupidity...if I was a shareholder, I'd be incandescent with rage. Since I'm not, I can just point a finger and giggle.

I predict that Yahoo will flounder for a few years, watching it's value plummet (both financially and socially) until such point as it's split up and sold off at pennies on the dollar to the only 3 people left at that point who still think it has anything worth pennies on the dollar. I see no way that Yahoo can ever recover from this. They're a portal and a search engine...which unfortunately for them is absolutely not unique - they're a commodity, and if Yahoo isn't around there's any number of other portals/search engines that people will use with no loss of functionality whatsoever.




RE: So, to try to remember my original post...
By Regs on 7/23/2008 3:19:22 PM , Rating: 2
quote:
...the boards "options" at this point amount to precisely #@$%-all.


Lol. I agree. That's why I laughed at the articles title. "Yahoo Considers Its Options as Profits Sink". What options are there? Sell the company for nothing, declare bankruptcy, lay off half their employees, liquidating assets, sticking their middle fingers up at the stock holders while the board of directors hold onto their millions?

If only they could sue for stupidity. Apparently the CEO thinks the value of Yahoo will continue to grow. Well...we're waiting?


RE: So, to try to remember my original post...
By mindless1 on 7/23/2008 7:55:36 PM , Rating: 2
Did it not occur to you that Yahoo is in fact still the 2nd largest next to google? Is this a small feat?

You call a moderate decrease in income, sinking? If everyone sold off their companies every time their profits went down some instead of up, do you understand how destabilizing and nightmarish this would be in the long run?

There's nothing stupid about holding out if you feel your company is undervalued. That is if you have some significant, researched ideas remaining to try and turn things around.

We don't know if that will happen. Neither does MS, but MS must think they have potential still.

Understand this important factor: If Yahoo were sinking so much, the last thing MS would want is to jump onboard a sinking ship. MS can't do search as well, Yahoo continues to beat them, so MS must be interested in Yahoo expertise, Yahoo ability, and the value of the name they built which would have to mean there is something left worth paying a lot for. You don't pay to climb onto a sinking ship.

For a bunch of stupid people they sure managed to get a powerful rich company to offer them a lot of money. How much did MS offer you to buy your business?

Frankly I think the stupid part is that MS is trying to buy their way in, instead of hiring the right people with the creativity and vision to give them what they want without having to buy (any part of) Yahoo at all. Maybe I seem like a Yahoo fan, but I prefer Google search myself and any time I end up in Yahoo's domain it is typically through a link from a 3rd party or Goggle, but I wouldn't avoid them or be so arrogant to ignore they are a large powerful company in their own right even if they aren't the biggest fish in the sea.

The options are the same as always plus one: Sell to MS. More options not less.


By Regs on 7/23/2008 11:51:43 PM , Rating: 2
Well you made some good points. Yahoo is still a vibrant company, and maybe the CEO thought MS would of steared it in the wrong direction. Maybe?


By theapparition on 7/24/2008 1:00:31 PM , Rating: 2
quote:
Understand this important factor: If Yahoo were sinking so much, the last thing MS would want is to jump onboard a sinking ship. MS can't do search as well, Yahoo continues to beat them, so MS must be interested in Yahoo expertise, Yahoo ability, and the value of the name they built which would have to mean there is something left worth paying a lot for. You don't pay to climb onto a sinking ship.

Completely incorrect.

Microsoft actually has a pretty good search engine, and IMHO, is returning more relevant results in some instances than Google.
Where Microsoft misses is with its searh brand, "Live". Adding the Yahoo brand to Microsoft's offerings would have been a win-win.

quote:
Did it not occur to you that Yahoo is in fact still the 2nd largest next to google? Is this a small feat?

Yahoo is actually (last I looked) the most visited site on the internet, and second in search. However, thier position has been eroding at an exponential pace. A pace that the Microsoft merger would potentially have slowed/stopped/reversed.

To claim that Yahoo is in a good position becuase of their current marketshare is patently false. GM used to be #1 too.


RE: So, to try to remember my original post...
By mindless1 on 7/24/2008 3:31:06 PM , Rating: 2
If it were just as simple as branding, MS could just spin off a company with a new brand. People don't just use Yahoo because of the name, if you tack the name onto the Live search you still end up with something people are not using as much.

It seems rather strange of you to think a merger with a company not doing as well in the same market would somehow slow/stop/reverse an erosion. It seems far more likely that changes in the market were bound to happen and Yahoo became overvalued, but that the readjusting market and the wildcard - Google, would have this effect regardless.

To claim Yahoo is in a good position because of marketshare is as relevant as it gets. If they weren't in a good position then MS wouldn't have been so eager to pay, whether the amount was agreeable to both parties is the only real factor here.

You want to use GM as an example, but it seems a pretty arbitrary thing to do since we could list every company that ever existed, having some growth and shrinkage in their respective market. The larger the company and faster they grow, the more likely they will eventually see such shrinkage as other companies enter that segment and do the same. It means regardless of MS involvement, both MS and Yahoo, and Google, are going to see shrinkage in that market. Maybe not today, but it's coming. The internet is still growing and advertising models are changing.


By theapparition on 7/24/2008 8:15:23 PM , Rating: 2
quote:
If it were just as simple as branding, MS could just spin off a company with a new brand.

They did........it's called Live. Technically, it's probably one of the best search engines out there. Establishing a brand is a harder thing to accomplish. With the Yahoo acquisition, they would have gained univeral recognition, plus with the incorporation of thier services, it would have strengthened a weakening brand. It also would have consolidated the market and immediately increased share. Definately something that MS wanted.

quote:
It seems rather strange of you to think a merger with a company not doing as well in the same market would somehow slow/stop/reverse an erosion.

Why not? It's happened so many times before. Many struggling companies merge to consolidate operations. Plus, with a combined presence, they can ensure a larger portion of advertising revenue.
Don't see why this is so hard to comprehend.

quote:
To claim Yahoo is in a good position because of marketshare is as relevant as it gets. If they weren't in a good position then MS wouldn't have been so eager to pay, whether the amount was agreeable to both parties is the only real factor here.

Errr, I never claimed Yahoo was in a good position, just the opposite. Fact is though, they were the most visited web page on the internet, and the number 2 search. But both numbers are declining, and fast. I believe it was you who were claiming Yahoo was a good company. But they are losing money rapidly. It would have been good to merge with MS, but without some sort of merger in the future, Yahoo will be gone. They are quickly becoming as irrelevant as AOL.


By mindless1 on 7/25/2008 4:27:46 PM , Rating: 2
It's not hard to comprehend, it's hard to believe you actually think a company less capable of doing what is needed (else they'd have a larger share) would have any influence at all besides dumping money into a losing proposition, that is IF Yahoo needs what you suggested.

The reality is, yahoo was displaced by google, but google too will find themselves losing market share eventually. This is the natural evolution of the internet search and services market and buyouts by someone doing worse are just a distraction from that reality.


huh..
By DASQ on 7/23/2008 10:16:09 AM , Rating: 3
That's a short article.




RE: huh..
By Motoman on 7/23/2008 10:18:42 AM , Rating: 2
Mmm-hmm. And they deleted my original post along with the original artical...wtf?


RE: huh..
By Spivonious on 7/23/2008 10:20:35 AM , Rating: 2
Server issues?


RE: huh..
By Brandon Hill (blog) on 7/23/2008 10:21:53 AM , Rating: 2
Yeah, don't know what happened, but it should be back up now.


RE: huh..
By DASQ on 7/23/2008 10:25:18 AM , Rating: 2
All is well. I like to pic, bee tee doubleyou.


RE: huh..
By Fracture on 7/23/2008 11:29:30 AM , Rating: 2
I see it is now proofread. Spelling has changed. See original:

quote:
Yahoo reports a week quarter, but refuses to believe that its yearly financial plan is off course


It's been touched up.


RE: huh..
By jonmcc33 on 7/24/2008 2:38:30 PM , Rating: 1
Spelling issues...that would be Jason Mick for you.


CEO's fault
By Aberforth on 7/23/2008 10:33:34 AM , Rating: 5
All this started because of Jerry Yang who is emotionally biased against MS and not thinking in the interest of the company and it's shareholders. Well, one can't be emotional in business, I think the board should chuck him out of the office - he has earned enough money it's only fair.




RE: CEO's fault
By Strunf on 7/23/2008 11:48:03 AM , Rating: 3
The interests of the company in this case don't match the interests of the shareholders. And there are shareholders and shareholders some invest on long term benefits and others like Icahn try to maximize benefits on the shortest term possible (he basically bought its 50 million shares in May 2008 and wanted to cash in the same month... and TWA was pretty much sold piece by piece once he got it).


RE: CEO's fault
By RamarC on 7/23/2008 6:34:13 PM , Rating: 3
$31 a share wasn't such an insult, was it Jerry?


RE: CEO's fault
By xphile on 7/23/2008 11:15:52 PM , Rating: 2
And even less of an insult if he gets them finally forced to end up accepting $25


Stock Price
By UppityMatt on 7/23/2008 11:02:52 AM , Rating: 3
If i was a shareholder i would be very angry with Yahoo. Current stock price is 21.90 at the current time of writing this comment, WAY below what Microsoft "undervalued" them with their higher offer. Out with Jerry!




RE: Stock Price
By fibreoptik on 7/23/2008 11:42:16 AM , Rating: 2
excellent. it's good time to get some Yahoo stock on the cheap :)


RE: Stock Price
By lukasbradley on 7/23/2008 12:14:30 PM , Rating: 1
It is absolutely AMAZING to me how many armchair NON-investors and clueless pontificators have jumped into the political war going on between Yahoo's board, Microsoft, and Carl Ichan. I'm astonished at the number of posts in this firestorm of discontent that start with "if I *WAS* a shareholder," then go on to lambast Jerry Yang.

These posts remind me of the small, yippie dog that follows around the other big dogs trying to fit into the pack. They are ignorant regurgitations regarding someone else's war over money and control.

Buy or short the stock. Otherwise, quit feeding the flames.


RE: Stock Price
By 67STANG on 7/23/2008 2:01:49 PM , Rating: 2
I don't own shares in Yahoo, but I do in Microsoft... I'm very pleased that their original, over-generous offer (in my opinion) was not accepted. I think Microsoft's stock would have sunk by picking up Yahoo at an inflated price.

I'm all for the ousting of Jerry Yang and Microsoft picking up Yahoo for around 30-40% less than what the original offer was for. It's only fair now that Yahoo's valuation is reflecting more what they are worth.

I also say that Microsoft should discuss the buyout/merger with Yahoo behind closed doors, so as to not provoke the market to artificially inflate Yahoo stock prices again...


POint of View
By kmmatney on 7/23/2008 6:39:29 PM , Rating: 2
According to CNN.Money, Yahoo's quarter was not so bad:

http://techland.blogs.fortune.cnn.com/2008/07/22/y...

It all on your point of view, I guess. A net income of 130M or so isn't so bad...




RE: POint of View
By sprockkets on 7/23/2008 10:21:56 PM , Rating: 2
Yeah, it's not as if they are like AMD and lost millions of dollars for 7 straight quarters.

Everyone is feeling the effects of the stupid oil companies.


RE: POint of View
By hadifa on 7/24/2008 12:03:19 AM , Rating: 2
quote:
Everyone is feeling the effects of the stupid oil companies.


Specially the oil companies... very smart oil companies.

The oil companies facing issues of their own, like not enough time to spend all the money they're earning.


Awesome Story Pic
By fuser197 on 7/26/2008 6:24:27 AM , Rating: 2
That story picture is awesome.




"So, I think the same thing of the music industry. They can't say that they're losing money, you know what I'm saying. They just probably don't have the same surplus that they had." -- Wu-Tang Clan founder RZA














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