Yahoo!, Inc. (YHOO)

TigerPack (99.98) wrote:

Yahoo! (YHOO) is a great value proposition with nearly $9 billion in net assets, mostly liquid, when measured against a $21 billion market cap. Please name another brand-name, blue-chip internet company, earning substantial sums of money, selling at 2 times its liquid book value? Answer: another one does NOT exist. In fact, Yahoo! has become the new-age media conglomerate that every newspaper, internet content provider and television network has been expending billions of dollars trying to emulate. Basically, YHOO is “the” new national newspaper, and the redesign of its home page the last few months, including direct links and partnerships with the likes of Ebay and Facebook and every other important online player is solidifying its position as preeminent going into a new economic advertising cycle.

2009's “free” cash flow yield will be THE HIGHEST in the company's history for investors based on the low stock price currently, AND THAT IS CALCULATED AT A BOTTOM IN THE OVERALL ECONOMY. The “free” cash flow yield today is around 5%, BEFORE a pick-up in the economy and advertising activity, plus the positive effect of the Microsoft search deal. In years past, YHOO has traditionally sold at a monster premium stock valuation vs. other stocks generally and even the majority of profitable internet-based businesses, while today it sells on par or a discount to other potential investments for your dollar.

Wall Street initially cried a river over the Microsoft search deal, because no upfront money was being paid to Yahoo! However, long-term owners of Yahoo! will collect huge sums of revenues without spending significant new capital in the heated competition with Google search. Basically, Microsoft will pay a majority cut of all ad revenues generated by Yahoo! search and keep up the database, without Yahoo! spending much money to run the operation for 10 years. After that, Yahoo! will still own its large database and owe Microsoft nothing. I don’t see how any rational observer can call this a bad deal? Incidentally, when you collect billions in revenues annually without spending substantial capital to create the sales, nearly the entire sum is kept as PROFITS for shareholders. Profit margin expansion will be nearly exponential in 2010 and 2011, largely as a result of this deal.

In contrast, Google is having to reinvest ever greater sums of money to keep search growing and competitive with Yahoo! and Microsoft. Google’s "free" cash flow as a percent of sales will be well UNDER 20% in 2010, and is around 20% currently. After the Microsoft deal, YHOO will slash search’s capital spending to almost nothing vs. years past. The "free" cash flow percent on revenues (profits available for shareholders to invest in other businesses or pay as a dividend without hurting future earnings) will be well ABOVE 20% next year, to as high as 25% of each dollar in sales in 2011-2012 as Yahoo! sells itself simply as the greatest content provider on the global internet stage.

After factoring in the effects of a better economy in 2010, the Microsoft deal that will add considerable “free” cash flow, and expected rising rates of inflation (which will be a boon to low cost, internet content/advertising companies like YHOO), Yahoo! should see a “free” cash flow number of better than 6.5%, if not 7.5%, next year based on the $17 stock quote, and well above 9% in 2011-2012.

What's not to like about this super-huge profit margin company with a pristine balance sheet, and the leading brand name in content on the internet???

The company could buy back 25% of the float of outstanding shares with the $5 billion in actual cash on hand, thereby increasing each existing shareholder's interest by 25% near the bottom of the economic cycle, and reported sales per share, cash flow per share and earnings per share by another 23%-25% (after deducting the 1% yield on money in the cash position that will disappear from the income statement on $5 billion, but accounting for the incredible accretive action of this move)!!!

Yes, YAHOO has plenty of options to increase investor worth with nearly 50 cents on each dollar of stock price in liquid investments that can easily be reshuffled.

The volume accumulation trend on Wall Street of Yahoo’s stock during the last month, after the supposedly bad deal with Microsoft highlighted clear buying by institutions and large brokerages in preparation for a SIGNIFICANT upmove. I have been screaming buy to everyone that will listen since the deal with Softie was announced, and made Yahoo! my single largest position when it traded closer to $14 per share a few weeks ago.

The brokerage upgrades the past week are one catalyst to reverse Yahoo! into a solidly higher price trend. Getting rid of turnaround artist Carl Ichan is another positive going forward (he has been selling shares at the low price the last few weeks after buying near the peak in the upper-$20s last year), as is the Alibaba deal to raise MORE cash and lock-in some gains from its significant Asia internet holdings.

I expect a large stock buyback announcement any day now, with all the cash sitting on the balance sheet earning 1% annually, that could be reinvested in the growing content/ad business at “free” cash flow yields of closer to 7%. Buying back shares under $20 each, would be a great long-term move by management.

This new-age media conglomerate should trade well above $30 a share next year given a more rational appraisal of the company’s terrific long-term growth prospects and the potential moves that could add real value to shareholder worth from the $5 to $9 billion in cash-like capital yet to be invested

It is worth more than it is selling for at this time. Panama hasn't had time to fully be appreciated.

Yahoo has an incredibly well integrated site that leverages one's information to provide information and services in return. Now that Panama is done, not only will search continue to improve, but much infrastructure is in place to enhance existing businesses. A couple of businesses I'm especially excited about include yahoo music and mobile search. Yahoo radio is becoming very popular quickly because of it's ability to introduce people to new music that fits their existing tastes. Combine this with their popular new mp3 player and there is a potential for huge upside. Yahoo is also one of the first to the mobile search space and could potentially steal some google market share if they can capitalize on mobile. Overall, yahoo has many strong businesses, and an infrastructure that will now allow it to improve upon and integrate all their businesses.

YAHOO! is an underrated company due to the focus placed on Google. Yahoo is making some investments in mobile applications and technology that will pay off in the future.

Second in industry means good chances of being bought up. MSFT deal shows theres interest, and Yang has his head in the game, trying to maximize value to the shareholder. Mobile Web Apps are going to make this company all over again, and with a strong Q1 Yang may be actually pulling off the turn around. This may be a rocky ride, but expect an outperform.

Call it a hunch but I am noticing more problems using Yahoo's website lately which me thinks is related to operations under the hood. Never thought Yahoo had necessarily a sustainable competitive advantage and think they will continue to decline from here. Not a strong feeling here but a pan for the community. Not buying or selling.

There is room for two players in the Internet Search field. Yahoo's stock price is depressed based on Google jitters, not fundamentals. Stop comparing it to GOOG and start seeing it for the great company that it is. And to boot, it has a more diversified revenue stream. Buy.

Female CEO: Carol Bartz

Yahoo Inc plans to name longtime Silicon Valley executive Carol Bartz as its next chief executive....

"She's known as a tough and fair leader; she's known for bringing people together and building consensus," said Allen Weiner, an analyst at Gartner. "That's certainly something that Yahoo needs right now. They need that adult leader to bring that order to the company."

At the same time, Weiner said: "She's not a hard-core engineer... She's not what you would call a dot-com or Web insider, but maybe that's not what Yahoo needs right now."

yahoo will probably be acquired by microsoft once MSFT feels the time is right to position themselves as a strong competitor to Google... its only a matter of time .. but when it launches .. it's gone .. wait till a bearish market (summer months) wait for a low .. and jump in .. then HOLD

Although I won't expand my pitch beyond a few weeks because Yahoo buyout talks are anything but dead, they're not going to happen in this market until Yahoo stock falls further, likely to $10 - no large-cap business at the moment is going to stick their nose out and buy another large-cap in a huge market downturn when they know that the stock may have more left to fall and they know they might be able to get a bargain out of it. This stock may be at a 52-week low, but the markets have shown us over the past few days that that means little. With a P/E of 18.11, this stock can easily fall into single-digits before it can really be considered undervalued. Hot air companies like Yahoo has been for quite a while now will get hit the hardest by a market downturn such as this one, and even if the market recovers, people will look to stronger and less volatile stocks than Yahoo - meaning that they will likely lead declines (as they did today; 8.07% vs. 7.62%) and trail recoveries.

Yahoo is a strong and successful company and if that were the only issue its stock price would be rising. The price has been down due to success of a major competitor. The internet is a huge market and Yahoo will continue to do well. As perceptions of its major competitior dampen somewhat, Yahoo stock price should rise.

The introduction of its new ad system should pay dividends for people that are willing to stick with the stock untill the 2nd half of this year. Which is when the Panama will really kick into effect

Yahoo has a new CEO, A new Technology Bull Market, and a lot of upside going foward.

With the crash of the newspaper markets, the rise in digital e-book readers, with M&A activity is poised to explode Yahoo! can be in the middle of EVERYTHING. There will be either Mergers or big name partnerships going forward... its just a matter of figuring out who they will team up with. Imagine an AMZN deal where Yahoo! is built into Kindle. Imagine Yahoo! being the main portal for all the displaced newspaper companies to push thier content now that paper is almost dead. Imagine Yahoo! selling some of it divisions better suited for companies like MSFT or APPL.

All the garbage from a year ago is gone. Price is down, Yang is Gone, and now its time for a real increase in Value with a very smart CEO who knows how to grow Yahoo!

Will David slay Goliath? Currently, this seems to be the popular question in the internet marketplace. The battle for the lucrative search engine advertising market is heating up. Yahoo, however, seems to be lagging behind Google. Speculation is rife that the Yahoo-AT&T brand sharing deal is on shaky ground. The deal, which involves pre installation of Yahoo branded software on the computers of AT&T DSL and broadband customers, accounts for approximately 5% of Yahoo’s annual revenues. Google has a similar alliance with Dell, where Dell gets paid for the software installation. AT&T is apparently having second thoughts about its alliance and a severance of the contract would severely affect Yahoo’s 2007 results.

On the brighter side, Yahoo has entered into a multi year deal with Viacom which gives them the exclusive rights to display search and content- related text ads on 33 Viacom web sites. MTV.com, VH1.com, Nickelodeon.com, Comedycentral.com and BET.com are some of the popular brands among these web sites. Viacom had earlier lodged a $1 billion copyright infringement lawsuit against Google. This makes the Yahoo-Viacom alliance look all the more ominous for Google.

Yahoo’s Panama is in direct competition with Google’s Adsense program. Viacom’s partnership with Yahoo could help the latter become a formidable threat to Google’s search engine advertising hegemony. Google had a 48.1% search market share in February, 2007 while Yahoo’s market share was flat at 28.1%. Google has already beta tested a new pay-per-action advertising model to attract more advertisers. It will take more than the Viacom deal for Yahoo to catch up with Google.

Yahoo’s 2006 revenues increased 23.1% year-over-year to $6.4 billion. The gains from the revenue increases were, however, more than offset by huge expenditure increases Stock compensation increase was the primary reason for this expense growth. The 22% EBITDA increase to $1.9 billion should, nonetheless, be a source for some comfort.

A share price that is at the high end of the 52 week range and a high P/E multiple indicates that Yahoo’s shares are overvalued. The company is therefore predicted to have a tough year ahead.

I fail to see how the internet is a zero sum game. Just becuase Google is good doesn't mean that Yahoo! is bad. There is room for everybody. Furthermore, I remember a few years ago when advertising on the internet dropped through the floor, and it will happen again. Yahoo! is the best positioned internet company to withstand an advertising downturn because it has ancillary businesses that do not solely rely on advertising dollars.

Slow to make strategic acquisitions, but not overpaying for hype either. Their revenue models are established workhorses in the mid-term while their competitors figure out how to monetize big new-media investments.

They are redoing all their services and ehancing them with new technology.
Over the long run the return on investment should be very good.
They may not have the best search engine but they do have revnue from the many services they provide.

stock is beaten down and will rally

Yahoo! has abandoned its original mission and purpose. Yahoo! was originally a Web directory. When you searched Yahoo! you were searching the directory. And it was a damn fine directory too. Then they added AltaVista search functions as an option, and eventually moved the directory to a different site and all but abandoned it. dir.yahoo.com is what Yahoo! used to be.

They could compete as a directory but as a general purpose search engine they have no hope. Switching from the directory to general search was a big big mistake. They should relaunch the directory, with guided search results and site reviews and focus on other cool features that don't get enough attention like the Y! Gaming site or their member directory which could be a MySpace or Facebook competitor if they had the cajones to develop it on out instead of messing with the stupid Yahoo! 360 concept. A social networking site with its own established messaging system, compelling multiplayer games, photo sharing, e-mail, and lots more. But they're too stupid to see it that way.