The initial reaction to Yahoo’s 4Q05 and 2005 numbers drove the price nearly 12 percent in after-hours trading. This morning, it’s down about 10 percent from yesterday’s $40.11 close. Reasons vary — the 39-percent sales growth rate was slower than the past three years; FY06 expectations were lowered; search share is being cut.
Lauren Rich Fine, analyst, Merrill Lynch: “The aftermarket share activity seems an over reaction, although we are lowering our estimates quite a bit. … Yahoo seems to have become a bit defensive and we now have some new concerns, i.e. growth of social communities such as MySpace, slower affiliate revenue growth, and delayed gratification on improved search monetization.”
Ben Schachter, analyst, UBS: “Yahoo disappointed with weak search results (particularly internationally) and lower than expected 2006 guidance, however, its branded business continued to post good results. While search share loses to Google, may prove difficult to overcome in the near-term, we think Yahoo has opportunities in 2006 to execute on other key initiatives, including: 1) Search monetization improvements 2) Yahoo Media 3) YPN 4) VoIP expansion 5) Yahoo! Go. … Not a lot was said on the call regarding the Yahoo Media group (Lloyd Braun’s division). We expect Lloyd to update the financial community for the first time by Yahoo’s analyst day (May 17) at the latest. When Lloyd was first hired, the common concern was that Yahoo might try to spend too much to create its own content, however, given the small projects announced to date, we think the new concern is that the group’s initiatives might be underwhelming in their near-term financial impact.”
Safa Rashtchy, analyst, Piper Jaffray & Co. (via Bloomberg): “I’m still scratching my head. It does seem like they may be losing some share in search.”
Scott Devitt, analyst,Stifel Nicolaus & Co.: Told CNNMoney.com the reaction to Yahoo!’s earnings miss was justified, adding that investors had been pricing in an irrational amount of outperformance from Yahoo and Google. “Earnings estimates should stop going up for both companies and people will try and figure out what the businesses are really worth, which is what they should have been doing in the first place.”
Subscriber content
?
Subscriber content comes from Gigaom Research, bridging the gap between breaking news and long-tail research. Visit any of our reports to learn more and subscribe.
Advertisement
Advertisement
Advertisement
Comments have been disabled for this post