Yahoo! Guidance Needs More Ying Than Yang (YHOO)

Yahoo! (NASDAQ: YHOO) has posted results of $0.15 EPS on revenues of $1.403 Billion (on an ex-TAC basis).  Consensus estimates from First Call were $0.11 EPS & $1.41 Billion Revenues.   As far as guidance, Yahoo! said that  revenues will be in a range of $1.28 to $1.38 Billion versus estimates of $1.37 Billion Revenues; for fiscal 2008 Yahoo! is placing revenues in a range of $5.35 to $5.95 Billion, although estimates were $5.90 Billion in revenues.

• Jerry Yang, CEO: “While we will continue to face headwinds this year, we believe that the moves we are making will help us exit 2008 stronger and more competitive and return to higher levels of operating cash flow growth in 2009.”  Hmm, that isn’t exactly an a$$-kicking comment.
• Yahoo! also issued a release saying it has named Ari Balogh as Chief Technology Officer, and he is formerly the CTO of VeriSign (NASDAQ:VRSN). 
• It is also expanding and extending its AT&T pact for wireless and PC screens.

Analysts still have a price target of roughly $32.00, and it will be interesting to see what happens to this price target tomorrow morning after analysts get to key in.  Last week we outlined an "earnings trifecta" where we compared and contrasted the earnings of Yahoo! (YHOO) for today, Amazon.com (NASDAQ: AMZN) for Wednesday, and Google (NASDAQ: GOOG) on Thursday. 

Yahoo! stock managed to climb back from being down over 2% today to close up $0.03 at $20.81 on 59 million shares and this stock has traded in a 52-week trading range of $18.72 to $34.08.  After the earnings report, Yahoo! stock is traded down 8% to $19.05 before recovering a bit to be down about 6% at $19.52 on last look in after-hours trading.

Maybe Jerry Yang will exert a bit more authority than this in the conference call.  It’s not too late, and it’s obvious that Yahoo! shareholders have proven over and over that they are willing to be patient.  We think layoffs are probably a part of a strategic plan, so hopefully his verbal comments will be more authoritative than the written outlook offered in their press release.

Jon C. Ogg
January 29, 2008