Yahoo Issues Weak Guidance for Q4

Since Yahoo already pre-announced its third-quarter results last month, the key to Yahoo's report today is its fourth-quarter outlook. And it doesn't look that good. Late Tuesday, Yahoo reported results in line with its reduced forecast, though the cash-flow figure was slightly better than analysts expected.

But for the fourth quarter, Yahoo said that it expects to earn $475 million to $575 million in cash flow and $1.145 to $1.265 billion in sales. The street was expecting earnings before interest, taxes, depreciation and amortization of $587 million on sales of $1.3 billion. The $3 billion buyback is certainly significant. But Yahoo has already bought back some of its shares, and that hasn't really helped its stock this year.

If Yahoo delays its Panama advertising platform another quarter, that'll be a disaster. There was no mention of this in the release, but I'm sure analysts will want to know just what the ETA is on that service. Additionally, it'll be interesting to hear if Yahoo's comments on plans or strategy to become a larger or relevant player in the social networking world.

Separately, Jordan Rohan, an analyst at RBC Capital Markets points out that Yahoo's sales in the U.S. grew "only" 14% y/y, while international sales grew 29%. This reflects loss of share in search and loss of affiliate deals. Rohan also expects to lower his 2007 EBITDA expectations by 5%.

See: Yahoo 3Q06 earnings conference call

Comments

[Stan Ross:]

Good. No, great. Sell or short YHOO. Then maybe I'll get a great price to swing at. There's definitely significant yet-to-fully-tap value in both Flickr and del.icio.us. YHOO owns both..

2006 Oct 18 03:15 AM