Yahoo! (NASDAQ:YHOO) reports after today’s close and this is probably going to be a different sort of earnings report than just evaluating the actual numbers. Estimates are $0.11 EPS and $1.24 Billion, but don’t forget that revenue estimate is ex-TAC (traffic acquisition costs). Now that Semel is mostly out, today’s reaction may actually be more of a focus on Jerry Yang as the new man and his ability to show the company is on track (or will be) and can work some magic. If it is just another "we are on track and we’ll update you on progress" message, then Wall Street probably won’t be too pleased.
Yang has only been reinserted for 3 weeks in the company and shares are actually down over 4% since that date. The truth is that this put the company in a real conundrum. How can an internet cornerstone be turned so quickly? It likely cannot, and if it can then you’ll see it reflected in the stock almost immediately. Here are the forward targets Wall Street is expecting, even if these numbers are a wildcard as of now: Q3 $0.12 EPS and $1.3 Billion revenues; Fiscal Dec-2007 $0.49 EPS and $5.19 Billion in revenues.
Options are hard to peg here, but it appears that options traders are bracing for a $0.60 to $0.65 move in either direction. Unfortunately those options expire on Friday, so the time value will compress rapidly. Its chart hasn’t shown anything impressive at all since the beginning of May, so the only good news there is that it was in oversold territory. How is that good in an up-market though?
Wall Street has been mixed about Jerry Yang so far, even though it got its wishes granted with what is mostly a Terry Semel outta-there. We thought a Semel exit would be a good start as well, and today will be the second chance for Yang to prove he’s the man. Sometimes it is always good to remember an old saying: "Be careful what you wish for, you might get it!"
This is all within two days before arch-rivals Microsoft (NASDAQ:MSFT) and Google (NASDAQ:GOOG) report their quarterly results as well. This one is looking too hard to effectively call ahead of time.
Jon C. Ogg
July 17, 2007
Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.
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