YHOO

Marissa Mayer’s Yahoo! Revitalization Continues

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Monday afternoon, former tech darling Yahoo! (click ticker for report: ) reported solid fourth-quarter results. Revenue jumped 2% year-over-year to $1.35 billion, and revenue ex-TAC (traffic acquisition costs) came in at $1.2 billion, a 4% year-over-year increase that was in line with consensus expectations. Operating earnings per share jumped 28% year-over-year to $0.32, easily exceeding consensus estimates. As wonderful as it is to see revenue grow, the real story at Yahoo! remains the turnaround that CEO Marissa Mayer has embarked upon. Given the incredibly competitive market for talent in the tech industry, Mayer has worked to transform the company into one of Silicon Valley’s best places to work. She noted in the conference call: To date, we introduced rigorous hiring … Read more

New York Times Experiences Advertising Weakness in Third Quarter

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On Thursday, the New York Times (click ticker for report: ) reported terrible third-quarter results that showed weakness in both print and digital advertising revenue. New York Times’ total revenue fell 0.6% as advertising revenue dropped nearly 9% during the period. The lower revenue was compounded by a 2.3% increase in operating costs during the period, as operating profit tumbled nearly 60% to $8.5 million from $21 million in the year-ago quarter. Print and digital advertising sales fell 10.9% and 2.2%, respectively, during the quarter and overwhelmed the 7.4% increase in circulation revenue. We’ve seen advertising weakness from other online-based consumer subscription firms such as Morningstar (click ticker for report: ), and we credit this trend to the growing digital … Read more

Yahoo Beats Estimates; We Like Mayer’s Strategy

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Web content firm Yahoo (click ticker for report: ) reported better than expected third quarter results Monday afternoon. Revenue grew 2% year-over-year to $1.09 billion, a touch better than consensus estimates. Operating income per share, which excludes the gain on sale of Alibaba, grew 66% year-over-year to $0.35, which was much better than the consensus expectation. Most of Yahoo’s profitability gains came from shrinking the workforce, which fell by 1,700 employees on a year-over-year basis, to 12,000. Sales and marketing expenses were cut 7% year-over-year to $269 million, while product development costs fell 5%. This focus on cost cutting allowed the company to generate adjusted operating cash flow of $496 million, up 39% compared to the third quarter of 2011. … Read more

Yahoo Mulls Asian Asset Swap; Risk Remains to the Downside

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Yahoo (YHOO), beleaguered with poor performance from its domestic operations, is reportedly looking to shed some of its Asian assets in order to help prop up its stock in the midst of a massive price slide in the past few years (the firm had been trading north of $30 per share in 2007 and now is in the mid-teens). Though the news of an Asian-asset sale/spin-off continues to make headlines, we remain unimpressed by Yahoo’s core competitive position relative to Google (GOOG) and Facebook and think the proposed complex transaction related to its Asian assets is but a temporary, short-term cash boost and not a permanent fix to the firm’s structural problems. We are sticking with our long-term fair value … Read more

Yahoo Reports Third Quarter: Asian Assets Major Source of Value; Legacy Business in Decline

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Yahoo (YHOO) reported terrible third-quarter results Tuesday. Revenue, excluding traffic acquisition costs, fell 5%, while GAAP revenue dropped 25%. The primary driver for the decline had to do with weaker revenue associated with its agreement with Microsoft (MSFT). We believe that softness in display revenue, which was roughly flat in the period, and turnover at the sales level also impacted results to some extent. The attractiveness of competing sites like Facebook and Google (GOOG) is becoming increasingly more difficult for Yahoo to overcome, in our opinion. Google’s third-quarter revenue, in contrast, advanced 33%! We are maintaining our $10 fair value estimate for Yahoo. Income from operations fell 6%, while net earnings per share dropped 26% from the prior-year period (diluted earnings per share fell 23%). Cash flow from … Read more

Ignore Debt Ceiling News, Focus on Corporate Earnings

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Simply put, the United States is not going to default on its debt. In other words, we think any market action resulting from the debt-ceiling issue will be irrelevant in coming months, and resolve itself in due time — as it has with any other crisis. Further, we remain unconvinced that this topic is a legitimate concern for long-term equity investors. The fact that America has a large national debt (and a problem with entitlement programs) is well documented in every history and social-studies textbook in grammar schools across the country; how can this be something that will blindside the markets? We’re not talking about derivatives on complex mortgage instruments here. The debt-ceiling deadline is purely a political issue, one … Read more

Yahoo Reports Dismal Second-Quarter Revenue

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Yahoo (YHOO) reported mixed second-quarter results Tuesday. Revenue, excluding traffic acquisition costs, fell 5%, while GAAP revenue dropped 23%, as softness in display revenue and turnover at the sales level impacted results toward the second half of the quarter. The attractiveness of competing sites like Facebook and Google (GOOG) is becoming increasingly more difficult for Yahoo to overcome, in our opinion. Income from operations, however, still advanced 9%, while net earnings per share jumped 18% from the prior-year period. Cash flow from operations fell 5% from the same period a year ago, while free cash flow shrunk 25% to $96 million during the quarter. We don’t expect a material about-face in Yahoo’s core U.S. operations, with the likes of Facebook and … Read more

Valuentum Weekly Web Commentary

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Stocks mentioned in this edition: Airbus (EADSY), Anthem (ANTM), Boeing (BA), Canada Pacific (CP), Chipotle (CMG), Cigna (CI), CSX (CSX), International Flavors & Fragrances (IFF), Lockheed Martin (LMT), NextEra (NEE), Rockwell Collins (COL), Stanley Black & Decker (SWK), Ulta Salon (ULTA), Union Pacific (UNP), UnitedHealth (UNH), Utilities Select Sector SPDR ETF (XLU), Vulcan Materials (VMC), W. W. Grainger (GWW) Chipotle Not Showing Signs Of Recovery What we originally believed to be a transient issue has turned into an extended public relations nightmare for fast-casual restaurant chain Chipotle (CMG). Though we do not necessarily question the safety of its food, we view its brand as damaged and the potential reward that would come along with a return to favor in the … Read more