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Tech Check
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Yahoo will once again pull the curtain back on its finances after the bell later today, and once again, investors will get a clear picture as to how deep the problems are for the troubled internet giant. 
Analysts this time around expect Yahoo to earn 8 cents a share on $1.2 billion in revenue, excluding Traffic Acquisition Costs. And while analysts are eager to see how this company has been performing, there are other issues that will gain lots more attention. Not the least of which will be details surrounding the company's ongoing turnaround strategy which by all accounts will include another sizeable layoff expected to be announced tonight that could include as many as 600 more positions.
CEO Carol Bartz will take to the speakerphone when Yahoo hosts its conference call, and she will likely be peppered with questions about the status of Yahoo's talks with Microsoft. That original, $47 billion offer for all of Yahoo is of course off the table, but it appears that Microsoft CEO Steve Ballmer and Bartz have been meeting, discussing, ruminating, sharing and maybe even planning about a Search advertising partnership of some kind. Analysts suspect that if Microsoft and Yahoo do end up holding hands, it would be a case where Microsoft would oversee text ads while Yahoo would maintain control over display advertising.
Just today in fact, Kara Swisher says her sources characterize talks between Ballmer and Bartz as "hot and heavy."
Citi's Mark Mahaney released his useful "cheat sheet" about Yahoo's earnings: He says a Yahoo miss on either the top or bottom lines would be viewed negatively; he anticipates Yahoo to guide to $1.67 billion in revenue for the company's second quarter and 9 cents a share in profits. Some other metrics to monitor: Owned and operated Display ad revenues should decline by 17 percent, and a steeper decline would be a problem for the company while a dip less than 10 percent would be viewed positively; owned and operated Search ad revenues should decline by 1 percent, while a decline of more than 3 percent would be negative and growth of 3 percent would be positive. Affiliate Sites net revenue should dip by 8 percent, with more than a 10 percent decline being bad, and less than 4 percent being good.
Mahaney's got a "hold" on Yahoo shares and a $15 target and says there are several "positive" developments for the company, including the company's ongoing plans for a turnaround; distancing itself from old management ways; and a stronger focus on the customer.
Martin Pyykkonen at Wunderlich Securities is far less optimistic, reiterating his "sell" on the shares and his $10 target. He says he needs to see a "revenue per search rebound to double-digit year over year growth, positive affiliate fee revenue growth and improved demand for Yahoo's premium display inventory to be more positive on the stock." That's a tall order considering that would mean Yahoo would have to reverse 8 quarters of poor performance in those categories.
He also makes the case that Yahoo is trading at a premium valuation versus Google, even though Google is growing far faster and is far more profitable, and he says the valuation disparity for Yahoo is "even greater and unwarranted relative to Google on a forward P/E.
Meantime, Jefferies has "buy" on Yahoo shares, with analyst Youssef Squali "bouyed by the new CEO's sense of urgency to maximize shareholder value."
Expectations are so low surrounding this company that absent a major miss and horrible guidance to the downside, or something material related to Microsoft on the upside, an inline quarter should keep these shares in a narrow range even with tonight's report.
Questions? Comments?
Data is a real-time snapshot *Data is delayed at least 15 minutes