This will be a giant week for tech stocks and tech investors, beginning with three huge names reporting earnings Tuesday: Yahoo , Intel and IBM. So rather than focus on what these companies HAVE reported, I thought I'd focus on what to expect instead. Here's the first of my three posts.
Let's begin with Yahoo, in the midst of a 100-day top to bottom strategic review instituted by new CEO and company co-founder Jerry Yang. Trouble is, expectations for the stock and this review are so low, some traders -- including some of our friends at Fast Money -- think there's only one direction for the company to go from here. My take: Don't underestimate just how low this company can go.
The Street is looking for $1.24 billion and 8 cents a share. Some on the Street are as high as $1.31 billion. I have no reason to believe they'll come in low on the topline; in fact, I have every indication that with the company's first real quarter of the Panama algorhythm online and generating dollars, that the company could offer up a nice upside surprise. I'm more concerned about the company's bottom-line; whether Jerry Yang has taken any meaningful steps to curb costs and improve margins.
As an aside, watch for Yahoo's search revenue, which makes up about half the company's business. Analysts will be keeping a close eye on that to see whether there's any message for Google's numbers coming this Thursday. Strength or weakness could telegraph some nice insight into Google's numbers. Display advertising will also get its fair share of attention: that's 40% of Yahoo's business and if the slowdown the company reported last quarter in that segment of its business continues, that could be a problem for the company's shares Tuesday.
Yahoo's conference call should also be illuminating: what are the structural, strategic steps this company is taking to better take on Google? So far, we haven't seen anything concrete, but that hasn't stopped investors from pushing Yahoo shares higher these past six weeks. That could mean a sizeable sell-off if the rumors leading up to the news don't measure up.
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