Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Yahoo Optimistic, Sharks Circling

By

Lackluster second quarter may mean blood in the water.

PrintPRINT
Yahoo's (YHOO) been getting a lot of ink lately: This week alone, the Internet stalwart reached a "settlement" in its long battle with Carl Icahn and disseminated its hotly anticipated second-quarter earnings report.

Many thought that the California-based company would fall short of expectations - and on that score, Yahoo certainly didn't disappoint. Net income came in at $131 million or $0.09 per share, as compared with $161 million or $0.11 per share for the same period last year. Analysts had been expecting between $0.10 and $0.11 per share. Net revenue came in at about $1.35 billion, just below analysts' estimates of $1.37 or $1.38 billion.

Despite these numbers, CEO Jerry Yang remained doggedly optimistic, saying that "Yahoo! ...is well positioned for long-term growth and maximizing stockholder value...We are seeing validation that we have the right strategy."

Just what that strategy is, however, is something about which Yang has been consistently vague, and his statements yesterday were no exception. Nowhere did he quantify his expectations, nor did he present a clear vision for the future. Yang also omitted mention of any cost-cutting plans - a topic near and dear to Mr. Icahn, and one he's sure to address.

Icahn abandoned his original proxy battle, which was to be decided by shareholders August 1st, in exchange for a seat on Yahoo's board, along with slots for 2 members of his original 8-person slate.

Yahoo said that it expects its search-advertising partnership with Google (GOOG) to generate as much as $450 million in operating income. The deal cannot begin, however, until the Department of Justice completes an antitrust review currently in progress. Some fear that the deal will only cede more of Yahoo's already dwindling market share to Google.

Though this quarter wasn't as bad as it might have been – especially given the fact that even Microsoft (MSFT) and once-invincible Google also reported lackluster quarters -- Icahn and crew are likely to use these results as evidence that urgent change is needed.

The downbeat numbers may finally force the company to work out some sort of deal with Microsoft - or at least ratchet up pressure on Yang and his board to finally put forth a workable plan for change.

As I said before, stay tuned: Icahn may have called a temporary ceasefire in his battle with Yahoo, but the war is far from over.

Yahoo closed at $21.40, down 27 cents, or 1.25%.
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

PrintPRINT
 
Featured Videos

WHAT'S POPULAR IN THE VILLE