Yahoo Results: Good, But Not Game-Changing (Update)

Yahoo's first quarter results are now out. I'll have more color later, but here is the gist in tabular form:

The Street consensus was that YHOO would be slightly ahead on the main metrics as the company sold everything not bolted down to beat the quarterly numbers. But this isn't a big beat so the stock isn't doing much in afterhours. It's kind of a "If this is the best you can do, then ..." reaction.

Or, as someone put it in a message to me just now, people are accusing them of padding sales with paperclips.

Quinlan: Come on, read my future for me.

Tanya: You haven't got any.

Quinlan: What do you mean?

Tanya: Your future is all used up.

- from Touch of Evil (1958)

The Yahoo Q1 conference call is underway. I'll give Jerry et al., credit for at least trying to talk futures, which they're doing at some length. But when the afterhours market reacts to news from Jerry that Yahoo is guiding cash flows higher by flatlining, then you know that investors have largely checked out.

Short of announcing a major deal with AOL, GOOG, or someone else -- which could admittedly still happen in this strange and drawn-out affair -- this is rapidly becoming kabuki theater. It is a costume drama that is all surfaces, one where no-one is talking about the only thing that matters, which is the Microsoft offer that has not been successfully fended off by today's results.

So, is Yahoo's future all used up? No, I'm exaggerating to make a point. After all, this is a company with great traffic and strong properties. But its future has irrevocably changed.

Comments

[David in NYC]

This might paradoxically make the deal more likely to go through, since if this is the best YHOO can do, then shareholders will start to pressure to just take the bid.

2008 Apr 22 05:09 PM

[cvillelb]

Because this a stock and cash deal, if MSFT goes above 32.60 then the bid is raised automatically without either party doing anything more. Thus all shareholders, institutional and individual, will want MSFT to go up and with a P/E of 14.4 it has room to grow.

2008 Apr 22 08:54 PM

[Pj568]

It may just be me but I don't see how anyone can justify the 31/sh value, much less a higher amount. YHOO's best earnings came when it was selling its Google stock. While they might have potential, there comes a time for it to be realized. YHOO hasn't made it happen and I doubt if MSFT can either. If I had been a stockholder of either company, I would have bailed when the offer was first announced.

2008 Apr 22 08:54 PM