Yahoo Shares Keep Falling: No Deals with Anyone?

Yahoo (YHOO) shares today hit a new five-year low, as the company continues to face the prospect of going it alone in an increasingly hostile market for online advertising.

Yahoo holders are focused on three possible deals, all of which have issues.

• The deal they’re trying to have: The plan to outsource some advertising sales to Google (GOOG) has been delayed in the face of increasing regulatory opposition. Susquehanna Investment Group analyst Marianne Wolk today revised her earnings model for Yahoo to eliminate the Google deal, asserting that there is “a rising possibility the deal is not executed.” She cut her EPS estimates on YHOO to 59 cents from 62 cents for this year, and to 64 cents from 79 cents for next year. She thinks it is more likely the company opts to restructure and reduce headcount.
• The deal Time Warner (TWX) would like to have: TechCrunch today asserted that a Yahoo/AOL deal could happen as soon as later this month. But Bernstein Research analyst Jeffrey Lindsay wrote a report which asserts a combination between the two companies is not likely. For starters, he says that an all-stock deal would only be accretive to YHOO at an AOL valuation of $3.4 billion or less, a price he says Time-Warner would likely find too low. Two, he says that any potential upside to holders would come from staff cuts, an area where he says Yahoo “has been particularly ineffective” in the past. And three, he notes that a deal would put AOL’s paid search agreement with Google at risk, jeopardizing $309 million in EBITDA, or “most of the potential synergies from the merger.” If no deal emerges, he thinks the other potential suitor for AOL is Microsoft, although here, too, he finds the prospects for a deal to be “remote.”
• The deal they could have had: Need I remind you that the company turned down as too low a Microsoft (MSFT) bid at $31 a share - more than twice the current stock price? Microsoft could come back again; but so far, they haven’t.

In today’s regular session, Yahoo fell 69 cents, or 4.3%, to $15.31; the stock is down another 31 cents after hours.

Comments

[flashrob01:]

Maybe long term they are fine without a deal...

2008 Oct 07 02:00 AM

[Distressed ...:]

They need to just keep popping out these tech ticker type internet tv shows, with different topics... Seriously, they'd keep building audiences, and ad revenue. I agree with Harrison at minyanville, it's a television network. Im wondering if they should scoop up peoples independent tv internetworks out there already, and integrate w/ Yahoo platform.. But they can't slack, I bet youtube could do the same type thing..and I'm not surprised they're slipping w/recession, but great aspect for future growth, I think atleast. www.distressedvolatili...

2008 Oct 07 03:10 AM

[ViewFar:]

Whether they like it or not, their lack of strategy sucks. Their down stock is going to put pressure on the management. Google is the clear leader in search. They should not attack Google on search, they should try other avenues instead.

2008 Oct 07 10:08 AM