Yahoo's Ad Delay: Buy Google Into Earnings?

Includes: GOOG, YHOO
by: David Jackson

Excerpt from our One Page Annotated Wall Street Journal Summary (receive it by email every morning by signing up here):

Yahoo Loses Ground to Rivals In Turning Ad Search Into Cash

  • Summary: Yahoo announced on its Q2 conference call that it was delaying the roll-out of its new search advertising system, called Panama, to Q4 from Q3. That gives Google a chance to take more market share. Google and Microsoft report earnings today, so it will become clear whether Yahoo's problems are company-specific or industry-wide.
  • Comment on related stocks/ETFs: Unusually for the WSJ, this article contains no new information and is entirely backwards looking. Yahoo's ad platform problems were priced in to the stock (NASDAQ:YHOO) yesterday when it fell 22%, and sell-side analysts like Tim Boyd and Brian Bolan sent notes to clients analysing the impact of the delay while the market was open yesterday. Even Jim Cramer said the 'hoo' was taken out of Yahoo!, and the stock now has a floor of $15. For more on this, see Yahoo's own comments from its conference call. The key issue for investors now is whether to buy Google's stock on Yahoo's competitive weakness going into earnings.