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Investors Not Shouting Yahoo! Over Changes

Wednesday, 6 Dec 2006 | 3:24 PM ET

Yahoo's trying--but Wall Street's not buying. Investors are not impressed with the web firm's management shake-up. Although Yahoo says the move is designed the make the company more productive, investors are punishing the company - pushing shares lower.

Why is the market turning a deaf ear to Yahoo’s optimistic overtures?

On "Street Signs" CNBC’s Erin Burnett asked Imran Khan--an internet analyst with JP Morgan.

Yahoo Reshuffle
A look at the reshuffling inside Yahoo! and whether it will make any difference, particularly since Terry Semel is still in charge, with Imran Khan, JP Morgan Internet Analyst, and CNBC's Erin Burnett.

Khan says the management restructuring poses a heighten risk of employee defections and will cause near term distractions--but overall he sees the management changes as a positive decision.

Khan says for 2007 JP Morgan is not optimistic about Yahoo! for the following reasons:
- audience is fragmenting
- pressure in CPM (clicks per minute) growth rate
- they don’t have a strong presence in European market
- and company’s innovation timeline is much longer than competitors

In the event that there is a buy-out offer – Khan thinks Yahoo! would consider it. Khan reminded us that a few months back on CNBC--he said that Yahoo! and eBay would make good potential partners – but, he can’t predict if an M&A will happen or not.

Analyst disclosure: GOOG and YHOO are investment banking clients of JP Morgan.

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  • Brian Sullivan is co-anchor of CNBC's "Street Signs."

  • Co-anchor of CNBC's "Street Signs," Amanda Drury is based at the network's global headquarters in Englewood Cliffs, N.J.