Yahoo Quarterly Earnings in Focus

Posted:10/22/12
By:Chris Lau

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Yahoo (YHOO) will report quarterly earnings after the bell today, an event that appears largely uneventful for its share price. Yahoo is stuck in a sideways range, in the middle of its 52-week low and high.

Yahoo is trading around 5% below its yearly high and 10% its low:

Investors who were caught up with the froth in social media stocks like Facebook (FB), LinkedIn (LNKD), and Yelp (YELP) might want to look at the progress of Yahoo’s turnaround. The main focus is going to be on the vision from its new CEO, Marissa Mayer.

In the last quarter, Yahoo made a few changes that will improve the focus for the company:

Yahoo announced it would exit South Korea, since it is underperforming there.
A new, tidier home page is being launched. The page generates 4.4 billion views each month.
Yahoo earned $3.65 billion from the sale of its holding on Alibaba. Yahoo has yet to decide if the funds will be used for a buyback, or given back to shareholders as a dividend payment. In September, the company said it planned to give more than 85% of the proceeds back to shareholders.
A Yahoo-Bing ad network was launched. This allows advertisers to buy text ads for 3^rd-party sites.
At a company meeting, Mayer said she would only approve projects that would generate 100 million users or $100 million in revenue.

Notable management changes at Yahoo are:

Mayer brought in Henrique de Castro as Chief Operating Officer, an ex-Google employee, a move that will cost Yahoo up to $56 million over four years
Ash Munshi, CTO, left the company.
Chief Financial Officer (“CFO”) Tim Morse departed.

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Investors who want to dig deeper in Yahoo should compare it to its competitors.

1. Yahoo! Inc. (YHOO, Earnings, Analysts, Financials): Operates as a digital media company that delivers personalized digital content and experiences, across devices and worldwide. Market cap at $18.76B, most recent closing price at $15.84.

2. Microsoft Corporation (MSFT, Earnings, Analysts, Financials): Develops, licenses, and supports a range of software products and services for various computing devices worldwide. Market cap at $241.46B, most recent closing price at $28.64.

3. AOL, Inc. (AOL, Earnings, Analysts, Financials): Operates as a Web services company that offers a suite of brands and offerings for the worldwide audience. Market cap at $3.41B, most recent closing price at $36.27.

4. Facebook, Inc. (FB, Earnings, Analysts, Financials): Engaged in building products to create utility for users, developers, and advertisers. Market cap at $40.71B, most recent closing price at $19.0.

5. Google Inc. (GOOG, Earnings, Analysts, Financials): Google is the world’s most popular search engine. Market cap at $222.97B, most recent closing price at $681.79.

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