Following Disappointing Q1 Results Yahoo Needs "Plan B" More Than Ever

This week has been one of the darkest for Yahoo! (YHOO) since our "Plan B" group started pushing for change at the Internet company on January 7th. From the first day after our campaign launched, Yahoo!'s stock price has been positive and ahead of Google's (GOOG) -- sometimes far ahead.

There was a time, a few short weeks ago, when Yahoo!'s stock price was up 13% while Google's was down 13% since the shareholder advocacy launched. Tonight, in the after-market trading, Google surpassed Yahoo! for the first time since the early part of this year in terms of percentage gains. In fact, today is also the first day since our launch when Yahoo!'s stock price is below where it was on January 7th.

As a shareholder group which believes in the long-term growth potential of Yahoo!, this has been an incredibly difficult week. Our group lost $7 million in shareholder value - from $61 million last week to $53 million tonight. Of course, we're in the same boat as all Yahoo! shareholders.

There's no question that the market got way too jazzed up about the "quick-fix" impact of Panama on Yahoo!'s results. There was also a bit of "Google-had-its-time-in-the-sun-for-the-last-2-years-so-it-must-be-Yahoo!'s-turn" stock-picker mentality driving the jump in Yahoo!'s stock price.

Several months ago, we cautioned that Panama was no cure-all for Yahoo! The biggest issue facing them is a continued loss of share in search. It's still an issue. Because of this, revenue growth has been steadily declining in each of the last 4 quarters. As Anthony Noto noted, it will be difficult to suddenly escalate the single digit growth to 20+% by end of year.

This has been a difficult week for Yahoo!'s shareholders: a difficult Q1 that stands out even more when compared to eBay's (EBAY) and Google's stellar results announced in the days afterwards.

Our group has offered a plan to improve Yahoo!. We are asking other Yahoo! shareholders to join our group and support us.

We believe in this company -- today, more than ever. Some Yahoo! shareholders have sold their stock as a sign of their displeasure (this selling continued, concerningly, today). That's their right. However, our shareholder group wants to be part of the solution. We believe there is still tremendous unlocked potential in this great company which possesses some of the best people in the technology world.

We support Yahoo!, but shareholders need "Plan B" today more than ever.

Disclosure: Author has a long position in YHOO

YHOO 1-yr chart

Comments

[oceandude:]

The problem is, what if people agree with the majority of this plan but have a problem with certain items? I think instituting a dividend is a terrible idea.

Also the author of this plan does not seem to understand Yahoo's operations very well. The plan implies that the Media Group is located in Burbank. It is not. Search Marketing is located there. The Media Group is located in Santa Monica.

2007 Apr 23 11:48 AM

[Eric Jackson1:]

Hi Frank: Thanks for your interest in supporting part of the plan and for the correction. You can let me know which parts you support at my blog: breakoutperformance.bl...

2007 Apr 24 12:05 AM