Analysts Split On Yahoo’s Prospects Following Q1 Earnings

Yahoo’s first quarter earnings were a somewhat mixed bag: cost cuts helped streamline operations, but revenue disappointed – and reaction from the analyst community was equally split in the morning-after reviews. Most agreed that Bartz was doing a good job wasting no time cutting unnecessary employees and products, but some analysts were optimistic about the company’s ability to meaningfully grow in the future while others were more cautious. Some samples after the jump:

Douglas Anmuth, Barclays: Anmuth was concerned that Yahoo!’s challenges are more operational versus Google’s performance, which he sees as more related to overall economic weakness than company-specific problems. Specifically Anmuth pointed to a deceleration in page view growth (8 percent versus double-digit growth in 2H08), which he attributes to a lack of product innovation at the company. Anmuth was also concerned with the worse-than-expected decrease in premium display pricing (overall display decreased 13 percent during the quarter): “There was very little commentary on how Yahoo (NSDQ: YHOO) is working to improve monetization of search and display. Macro seemed to be the overriding factor here.’ He pointed out that there may be company-specific improvement that could be made to boost ad rates. Finally, unlike other analysts, Anmuth believes layoffs (the company said it will cut staff by 5 percent) and sunsetting of non-core products could ultimately be deeper.

Justin Post, Merill Lynch: Most of Post’s concerns were with Yahoo’s search product. Post believes that the company’s limited presence in international search could hurt its chances of bringing a potential Microsoft (NSDQ: MSFT) partnership to fruition. “We calculate international O&O search revenue of only $55mn in 1Q

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