GOOG

Yahoo’s Turnaround Not Progressing As Planned

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On Tuesday, Yahoo (click ticker for report: ) reported lackluster second-quarter results that showed its turnaround is not progressing as planned. The firm’s revenue (excluding traffic acquisition costs—TAC) dropped modestly from the same period a year ago, while non-GAAP income from operations fell 13% (adjusted EBITDA decreased 7%). Earnings in equity interests, which include its 24% stake in China-based Alibaba Group and 35% ownership in Yahoo Japan, advanced nearly 25% (representing one of the few bright spots in the quarter). Non-GAAP net earnings per share jumped 19%, to $0.35, better than the consensus estimate, but the performance was bolstered primarily by a reduced share count. The quarter was a low-quality beat, in our view, and we’re particularly discouraged by Yahoo’s core … Read more

Why Valuentum’s Email Transaction Alerts Are Worth Paying Attention To

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Valuentum subscribers have noticed that we’ve been quite busy as of late, adding protection to our portfolio in the form of a broader-market put option and taking some large profits in Astronics (ATRO) and eBay (EBAY). We’ve highlighted our best-in-class hit rate–meaning that a large percentage of the firms we added to the portfolio are outperforming the broad market benchmark. But there are a couple ways of looking at our performance–the first is relative outperformance versus the market since inception, which is at 28 percentage points. Investors duplicating our portfolio are enjoying this outperformance. Another way of looking at our track record, however, is to evaluate the performance of additions to the portfolio on the long side (purchases) since inception–i.e. … Read more

iOS Gets a Facelift: Apple’s Worldwide Developers Conference

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Day 1 has passed at Best Ideas Newsletter holding Apple’s (click ticker for report: ), and we were hit with a barrage of news. The most pertinent issue of the day was the introduction of iOS 7, the iPhone and iPad’s new operating system. It is the first major overhaul of iOS, and it signals the company is serious about bringing positive changes. In addition to a new mobile operating system, Apple unveiled iTunes Radio, a streaming music service to compete with the likes of Pandora (click ticker for report: ) and Spotify. Lastly, the firm unveiled its newest Mac Pro—one of the most innovative products we’ve seen from the company in the last year. iOS 7 Image Source: Apple … Read more

Google Getting Social About Maps

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Best Ideas Newsletter holding Google (click ticker for report: ) is on the brink of making a big splash in the map space, as it is reportedly set to acquire social map application Waze for $1.3 billion. This comes after months of speculation that Apple (click ticker for report: ) and Facebook (click ticker for report: ) were also bidding to acquire the Israeli-based tech company. Although Google Maps remains a highly-regarded product, Waze is a step in a different direction. Waze differs from other map applications because it harnesses user-submitted data (largely via GPS) to provide real-time traffic and driving updates. The application provides data on traffic flow, accidents and other specific events that could slow traffic, information on … Read more

What Did We Learn About Apple from the All Things D Conference?

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During the past few weeks, Apple (click ticker for report: ) has re-entered the market’s collective psyche in a big way. First, CEO Tim Cook was grilled by congress over how the company skirts US income taxes. While Apple broke no laws, the company still got targeted for its complex tax avoidance structure. We think this news couldn’t be any less material, especially since literally thousands of other companies use similar tactics. In our view, Apple was singled out because it’s one of the largest companies in the world. The hearing is nothing more than a silly sideshow, and we doubt it will amount to anything more than a few weeks of headlines. On the other hand, Cook spoke on … Read more

Let’s Take a Victory Lap: $1,000 Is in the Cards for Google

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During the past six months, shares of Best Ideas Newsletter portfolio holding Google (click ticker for report: ) have performed exceptionally well, increasing over 40% compared to a 22% gain for the NASDAQ over the same time period. Given the tremendous fundamentals of Google’s core search business, continued mobile monetization, and a stable of potentially blockbuster products, we continue to believe shares have upside north of $1,000 per share. The main driver of our fair value estimate remains Google’s advertising business. The core search business saw paid clicks rise 20% year-over-year during the most recent quarter, driving Google Site Revenue 18% higher to $8.6 billion. Demand for online advertising shows no signs of slowing, but perhaps more importantly, Google has … Read more

Facebook and LinkedIn Early In Monetization; Neither a Bargain

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During the past week, publicly traded social media giants Facebook (click ticker for report: ) and LinkedIn (click ticker for report: ) both reported strong first quarter results. Facebook’s revenue grew 38% year-over-year to $1.46 billion, exceeding consensus estimates, while earnings per share were flat at $0.12. LinkedIn’s revenue surged 72% year-over-year to $325 million driving earnings per share of $0.45—both figures handily better than consensus expectations. Cash flow at both companies revealed significantly different stories. LinkedIn generated roughly $59 million in free cash flow as the company’s research and development spending was kept in check. Facebook posted negative free cash flow of $12 million as the firm invested heavily in mobile, servers, and data centers. Both firms’ valuations are … Read more

Yahoo: The Turnaround

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Internet search and content provider Yahoo (click ticker for report: ) reported first-quarter results that were mediocre. Revenue ex-TAC (excluding traffic acquisition costs) was flat year-over-year, falling short of consensus estimates. Earnings per share easily exceeded consensus expectations, rising 52% year-over-year to $0.35. Yahoo provided non-GAAP earnings per share of $0.38 that excluded stock-based compensation expense. Unfortunately for shareholders, the EPS increase was mostly the result of a 10% reduction in share count, a reversal of one-time charges, and a significantly lower tax rate. Non-GAAP operating income fell $7 million year-over-year to $224 million. Operating cash flow also declined to the magnitude of 26%, while free cash flow also declined 20%. In our view, the quarter was not nearly as strong … Read more

Shares of Baidu Are Just Too Cheap

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Valuations for internet technology companies are literally all over the place. On one end of the spectrum sits LinkedIn (click ticker for report: ) and Amazon (click ticker for report: )—fast growing firms with sky-high PE multiples and tremendous credit given to the long-run. On the other end, we have Apple (click ticker for report: ) generating fantastic amounts of free cash flow, and trading with a single-digits forward PE. Chinese search giant Baidu (click ticker for report: ) falls closer to Apple, and we think shares look incredibly cheap at current levels. Let’s take a closer look at the search giant. Valuation Baidu’s valuation on a discounted cash flow basis looks extremely reasonable. We estimate shares to be worth … Read more