Internet pioneer Yahoo is scheduled to report its fourth-quarter results after the stock market closes Tuesday. And all eyes are on Carol Bartz, the technology veteran who replaced Jerry Yang earlier this month as the firm’s CEO.
Most analysts expect Bartz — known as a tough, savvy leader — to start off by setting a low earnings hurdle for Yahoo to clear in 2009, giving her a better opportunity to surpass expectations as she tries to prove she is the right person for the job.
Will Bartz Sell?
As she tries to figure out how to lift Yahoo's drooping profits and stock price, Bartz also is likely to decide if it makes sense for the company to sell its search operations to Microsoft . While the software maker has made it clear it no longer wants to buy Yahoo in its entirety, Microsoft CEO Steve Ballmer has repeatedly said he remains interested in buying Yahoo's search engine or forming a partnership aimed at undercutting Google's dominance for the search market.
Bartz has indicated she is unlikely to make any dramatic changes until she gets a better grasp on Yahoo's strengths and weaknesses — a process that could take several months. She already has underscored her intention to control costs by imposing a pay freeze for the rest of this year.
What’s the trade?
Don’t play with fire, counsels Sanford Bernstein analyst Jeff Lindsay “(Although) Yahoo has a new CEO and a new team we don’t know what the plan is. Right now it’s a value trap.”
If you’re looking for a trade Lindsay likes Google much better. It’s currently trading at a 15 multiple “and it could get up to 20,” he says.
And if you’re looking for an Internet trade but have no interest in Google or Yahoo! -- Tim Seymour adds that he loves Baidu.com in China.
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Trader disclosure: On Jan. 26th, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Seymour Owns (AAPL), (BAC), (EEM), (F), (FXI), (PBR); Seymour Owns A Short Position In (SNE); Seymour's Firm Owns (BIDU); Macke Owns (MS), (BAC), (SDS), (MCD); Adami Owns (AGU), (C), (BTU), (GS), (INTC), (MSFT), (NUE); Najarian Owns (EEM) Call Spread; Najarian Owns (FCX) & (FCX) Short Calls; Najarian Owns (GE) Put Spread; Najarian Owns (MSFT) & (MSFT) Short Calls; Najarian Owns (MS) & (MS) Short Calls/Put Spread; Najarian Owns (PALM) Calls
Sanford Bernstein Makes A Market In The Shares of (YHOO)