More Videos
- 3D's Tipping Point and Your Living Room
- Silicon Valley and Hollywood Now Fast Friends
- HP Comes in As Expected; Is It Time to Buy?
- Apple Comes to AT&T's Rescue
- My Top 10 Tech Toys for the Holidays
- iPhone a Better Gaming Platform Than Android?
- Dell Has Some Explaining to Do
- Dell May Start to Show Some Promise
- Has Twitter's Finest Hours (Seconds) Come and Gone?
- Intel's Andy Bryant Offers An Explanation
MOST SHARED
- The Executive Job Search
- Where Do Pardoned Turkeys Go?
- Salvation Army's Kettles Now Credit Card-Ready
- US Mint to Suspend American Eagle Gold 1-Ounce Coins
- Activision Prepares to Double Dip on ‘Modern Warfare 2’
- S&P Stocks Trading at New 52-Week Highs
- Chinese Overcapacity is Worsening, EU Chamber Warns
- Oil Friday
- Trader Talk
- 4 Thanksgiving Week Buys For Your Portfolio: Market Pros
- There's a 'Great Chance' For a Double-Dip Recession: Strategist
- Revenge of the Gangsta Nerds
- Will TCU See The "Flutie Effect?"
- Retail Earnings and Sales to Improve in Q4: Analyst
- Consumers Catching the Holiday Spirit
- It's Beginning To Look A Lot More Riskless
- Crescenzi: Claims Level Suggests End to Job Losses
- Hedge Funds Take Early Lead in Warren Buffett's 'Big Bet'
- Dubai Seeks Debt Delay, Stokes Default Fears
- Black Friday to Avoid Red Ink; Greenback Gets the Blues
- Bankruptcies Jump, Hitting Highest Level in Four Years
- AIG, Ex-CEO Greenberg Reach Pact to Settle Disputes
- Bank of America CEO Search May Extend Into 2010
- Steepest Black Friday Discounts, Revealed
- Fed to Counsel Moviegoers on How to Use Credit Cards
- 'Cancer of Fraud' Permeates Health Care System: Critics
- Where Do Pardoned Turkeys Go?
RSS FEED
Tech Check
Text Size 
Yahoo [YHOO
Loading...
()
] investors are preparing for the worst and hoping for the best, but those hopes are dim for any good news after the bell tonight when the company reports its fourth quarter earnings.
If anything, the Street will get another chance to ask new CEO Carol Bartz some tough questions about what happens next, and if she's had a chance to solidify any strategic priorities for the company.
Analysts expect Yahoo to report 12 cents a share on $1.37 billion in net revenue.
Guidance will also be important, given that Google [GOOG
Loading...
()
] doesn't offer any so its report last week was only marginally helpful as investors look out to the rest of 2009. The street is looking for Q1 revenue of $1.78 billion to $1.80 billion; and for the year, gross revenue of $7.3 billion to $7.6 billion. Mark Mahaney at Citigroup, for one, expects the company to come in at the high end of those ranges when it offers guidance tonight.
Other key areas to watch: display ad revenue which likely suffered a 5 percent, year-over-year decline during the fourth quarter, according to some analysts, but as much as a 10 percent slide, says Jefferies Youseff Squali. Mahaney echoes those pessimistic sentiments, writing that the "tough macro conditions" are deeply affecting the company, and "we see Yahoo's fundamentals deteriorating in Q4." A bright spot might be Search advertising, which may have seen continued momentum, up 16 percent during the fourth quarter, according to BernsteinResearch's Jeff Lindsay.
In fact, with display advertising continuing to slide, and Search advertising continuing to climb (it was up 17 percent during the third quarter), there's a growing thought on the Street that Yahoo may not be so eager to sell off the unit to Microsoft [MSFT
Loading...
()
] , which has been widely anticipated since the company pushed back from the table, taking its $33 a share, $47 billion offer with it.
That said, there's been increasing chatter these past couple of weeks that Microsoft, Yahoo and Time-Warner's AOL [TWX
Loading...
()
] unit continue to discuss possible scenarios that has Yahoo selling its Search business to Microsoft, Microsoft spending a bunch of cash for it, and then helping to prop up a new, combined Yahoo/AOL entity.
So let's talk expectations and refer to Mahaney's handy-dandy "cheat sheet."
He's looking for $1.4 billion in revenue, though anything less than $1.37 billion would be a problem. As far as EBITDA is concerned, he's below the Street's $522 million, anticipating $515 million, but something below a half billion dollars would be considered negative. He's a penny ahead EPS consensus, but should the company miss, it'll take a toll on shares. Other key metrics: Owned and operated display advertising should decline by 1 percent; owned and operating gross Search advertising should be up 15 percent; affiliate sites net revenue should decline 6.5 percent, though anything more than a 9 percent decline would be an issue; and fees revenue should come in around $213 million, but something below $200 million would be a problem.
The bigger issue for Yahoo is what Bartz will talk about on the conference call.
No one really anticipates a comprehensive turnaround strategy since she's only been walking the campus for a couple of weeks. We broke the story last week on this blog that one of her first orders of business was to institute a pay-raise freeze for all the company's employees — the first freeze in Yahoo's history — even as she signed a compensation package deal that some say could be worth over $40 million.
Nonetheless, some analysts on the Street anticipate yet another deep workforce reduction that could exceed another 1,000 employees, following two big layoffs in 2008. Bartz has publicly been resistant to a Search deal with Microsoft, worried that such an arrangement would leave Yahoo without a key revenue generator that seems to be doing well. Without a deal, however, investors are wondering what, if anything, Yahoo can do to turn its fortunes around, and whether Bartz — or anyone — can come up with an effective plan.
I've spoken to a number of employees at Yahoo this past week, some of whom have had direct contact with Bartz. I'm told they appreciate her no-nonsense approach, that she's a good listener, that she seems very much entrenched in a fact-finding mission.
The question for investors is how long that process will take — and how patient the Street will be, as she formulates a plan.
She's been averse to a set period of time for financial recon at the company, but she knows the clock is ticking and the pressure's on. Yahoo's shares are teetering at the $11 level, at risk of falling into the $10 range for the first time in 6 years. And while she ponders, and recons, and fact-finds, and ruminates, and investigates, Google, based on last week's earnings, continues to widen the gap.
Tick tock. Tick tock.
Questions? Comments?
Data is a real-time snapshot *Data is delayed at least 15 minutes