Yahoo adds to losses; sell-side worries about Alibaba, share loss

Evercore has trimmed its Yahoo (YHOO -7.4%) PT to $39 from $40 in response to Alibaba's (ABABA) weaker-than-expected Q3 revenue. The firm has cut its Alibaba valuation by 5% to $150B, and now gives Yahoo's 24% stake a post-tax value of $22/share.

Evercore also isn't thrilled with Yahoo's soft Q1 margin guidance and lack of formal full-year guidance, though it is pleased Yahoo's total and mobile active user bases (exc. Tumblr) respectively rose 20% and 60% in 2013 to 800M and 400M. The latter is inflated some by pre-installed iPhone apps that don't feature Yahoo branding or ads.

Gabelli has cut shares to Hold. Though still giving Yahoo a $42/share sum-of-the-parts valuation, it doesn't see "a sufficient margin of safety" following the company's big 2012/2013 run-up.

Cantor has upped its PT to $40 from $38, but also observes continues to lose display and search ad share, and says "the clock is now ticking" for Marissa Mayer & Co. to deliver a turnaround. SunTrust remains bullish, upping its PT to $42 from $34 and estimating Yahoo's core business is only being valued at 3x EBITDA.

Meanwhile, TechCrunch reports Yahoo has acqui-hired enterprise app studio Tomfoolery. All four of the startup's co-founders will be joining Yahoo.

On the CC (transcript), Mayer admitted Yahoo's mobile revenue "is still not material" relative to the rest of its business, but insisted some of its ad products (Stream ads?) will work better on mobile than PCs.

Q4 results, guidance/Alibaba's numbers

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Comments (14)
  • SivBum
    , contributor
    Comments (2790) | Send Message
    Problem is that the ads work better but not great in smaller phones and tablets. Meanwhile, they stinks with desktops and laptops.
    29 Jan 2014, 12:12 PM Reply Like
  • june1234
    , contributor
    Comments (4504) | Send Message
    That new CEO was a marketing stroke of genius by YHOO. Problem is they're still YHOO.
    29 Jan 2014, 12:19 PM Reply Like
  • wigit5
    , contributor
    Comments (4365) | Send Message
    I like her and what she represents in the tech community but not sure anyone can manage the expectations $YHOO has...
    29 Jan 2014, 12:48 PM Reply Like
  • tom_t
    , contributor
    Comments (323) | Send Message
    Maybe her Google success was due to other people, not to her. I don't even know why Yahoo exists. It serves no purpose that isn't served better by other companies.
    29 Jan 2014, 02:07 PM Reply Like
  • deercreekvols
    , contributor
    Comments (9849) | Send Message
    Yahoo stated, before the disappointing report, that advertising revenue was down. The lack of quality content hurts Yahoo, in my opinion. They are nothing more than a tabloid, with the exception of Yahoo Finance, which I find to be a quality site.


    The flash of CEO Mayer has worn off. Haven't seen if any of her acquisitions are panning out. Board seemingly allowed Mayer to anything she wanted and the time to show she knew what she was doing is now.
    29 Jan 2014, 01:33 PM Reply Like
  • toosmarttofail
    , contributor
    Comments (706) | Send Message
    YAHOO's problem is simple: people would rather look right and be wrong than the other way around. Make a logical decision that destroys the company, and you keep your job. Make a bold decision that could save the company, and you risk your job.


    It's better for everyone to feed at the trough until the corpse is picked clean than to attempt to save the patient before it dies.
    29 Jan 2014, 04:24 PM Reply Like
  • Pete P.
    , contributor
    Comments (1019) | Send Message
    Yup, at least Marissa Mayer is willing to make bold decisions to save the company. By just about all metrics, they are headed in the right direction. I think the next earnings report will tell a much different, even more positive story.
    29 Jan 2014, 05:54 PM Reply Like
  • rob simon
    , contributor
    Comments (8) | Send Message
    Traders using desktops most likely aren't into stocks like FB, YHOO, TSLA anyway
    29 Jan 2014, 01:34 PM Reply Like
  • milehr
    , contributor
    Comments (698) | Send Message
    The CEO should go. In fact, she should have never been hired, and putting her at the top of the company only shows how clueless the board is. They are still playing with the portal, making it worse with every change, while earlier bugs remain unfixed. Speaks volume of the management incompetency and bad attitude. If not for Alibaba stake, would have sold my shares right after they hit 300% return.
    29 Jan 2014, 01:38 PM Reply Like
  • Pete P.
    , contributor
    Comments (1019) | Send Message
    Milehr, Yahoo's traffic numbers are now higher than they were in 2011. Number of users is up to all time highs. Yahoo is the #1 trafficked site according to Comscore in the US based on unique visitors. Mobile users up to over 400 million monthly.


    What the heck more do you want.


    I read the posts here and it just seems people have a problem with Yahoo in general. Their apps are fantastic. I personally went from using no Yahoo apps to using about 5 of them regularly.


    Marissa Mayer is doing a great job. IMHO
    29 Jan 2014, 03:00 PM Reply Like
  • Seshu Kanuri
    , contributor
    Comments (27) | Send Message
    This is what happens when you bring a loser on board as CEO of a web company that is drifting into oblivion as Yahoo does not have any USP left.


    Entire board should be fired and whatever they have paid to the current CEO, should be recovered till the last penny. This board is like US Congress with John Boehner running the show.
    29 Jan 2014, 01:59 PM Reply Like
  • wallace2000
    , contributor
    Comments (56) | Send Message
    I sold today, thankful of making really good money over the past year.


    I sold for the following reasons:
    *Alibaba's growth is slowing down, Alibaba is the helium keeping this balloon in the air.
    China last week has economic indicators pointing to a slowdown


    *MM and her cult of personality is wearing off. I viewed the earnings call last night over the choppy connection and she seemed ill-at-ease and worn. She is not Jeff Bezel who stock holders will give years of waiting to to get to his/her end vision.


    *I checked with 5 research brokers and all had higher Price targets on Yahoo, this tells me it is a good time to sell.


    *The COO firing shows that there is disention in the ranks, and that this company will live and die with MM, who hired this COO and signed off on his $100M parachute - wasting stock holders money. There has been a few other exits.


    *YHOO went through an upgrade of YHOO finance that was a complete distaster. Being a user for over a decade, and being extremely uphappy, I actually went to complain on line and they had +1,000 complaints about it. It is my feeling that the person that designed this upgrade is not an active investor. More pretty than useful. I read yesterday that Bloomberg is picking up market share. I can guess from who or should I say from Yahoo.


    *MM wasted more money by getting Katie Courik (sp?). She has not increased ratings anywhere she has gone. This will be a terrible ROI. The only ROI on this will be in Katie's pocket. They should have got someone who appeals to younger people more. The Tumblr crowd. Or even the under 40 crowd.


    *SNL content investment? Again, does anyone under 30 even watch SNL? How 'bout starting with the X-Games, or something with a younger audience.


    These are some of the things that I have seen lately and has moved me towards a sell decision. Style and aura are nice, but top and bottom line growth are better.
    29 Jan 2014, 03:26 PM Reply Like
  • Pete P.
    , contributor
    Comments (1019) | Send Message
    Selling is a good thing for you. Glad you made money.


    Here's what I see. Yahoo's traffic numbers are up across the board. all of the changes you complain about have resulted in more users and more traffic. It's hard to argue with that.


    Mobile users over 400 million??? Wow, that is a pretty good audience to leverage for advertising.


    Don't be surprised when Yahoo announces an increase in ad revenue in 2014 and everyone jumps on the bandwagon. It's not "IF" it will happen, its "WHEN".
    29 Jan 2014, 04:09 PM Reply Like
  • pjwraw
    , contributor
    Comments (65) | Send Message
    It's all about Alibaba now and those numbers are coming down. Not looking good. Lost faith in MM and core business. Sold out today. May get back in around 30. Good luck to all!
    29 Jan 2014, 04:36 PM Reply Like
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