Going into earnings, it is always important to look at which Internet search giant investors have made bigger bets on: Google (GOOG-NASDAQ) versus Yahoo! (YHOO).
Yahoo (YHOO) reports after the close today; YHOO expectations: $0.11 EPS & R$1.21 Billion; next quarter $0.13 EPS & R$1.28 Billion.
Google (GOOG) reports after the close on Thursday (APR 19); GOOG expectations: $3.30 EPS & R$2.495 Billion; next quarter $3.42 EPS & R$2.64 Billion.
Internal Metrics
Google Internal Metrics: Google does not offer guidance and now the street has two major deals to content with in forward numbers. Late last year it consumed YouTube, and now it has started the process of consuming DoubleClick. Google is in a pact to allow radio ad placements now with Clear Channel, and they already have tested "excess line ad and classifieds" placement at papers on an ongoing basis.
Yahoo! Internal Metrics: Yahoo! has recently launched its new Panama ad platform, and the street is backing this as the stabilizer for the company. Yahoo! just expanded its newspaper alliance to more than 260 US-based papers. If the company can please the street with guidance and with Panama, then Terry Semel will have saved his job. Yahoo! also has content deals with the new NBC Universal, Viacom, and News Corp launch. If the company guides down in a manner that irriates Wall Street or if there are any concerns that Panama already peaked right after launch, then there will be more calls for his head. There is now the question as to whether or not Yahoo! will decide to go after and acquire one of the online advertising firms after the Google-DoubleClick deal.
Stock Performance
YHOO was at $26.96 before last earnings; it closed yesterday at $31.61 and is up more than 1% today; so stock is up roughly 17% since then. YHOO closed out 2006 at $25.54.
GOOG was at $501.50 at the close before last earnings; so stock is down roughly 5% since then; its closed yesterday at $474.24 and shares are basically flat today. GOOG closed out 2006 at $460.48.
Traffic Acquisition Costs "TAC"
Don’t forget that each company has to back out its "traffic acquisition costs" outside of the lead earnings headlines. YHOO posted $1.702 Billion in revenues, but ex-TAC revenues were $1.228 Billion. GOOG posted revenues of $3.21 Billion, but ex-TAC revenues were $2.234 Billion. The ex-TAC revenues are the ones to watch.
Jon C. Ogg
April 17, 2007
Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.
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