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Yahoo Beats Back the Naysayers

The exterior of Yahoo! corporate headquarters in Santa Clara, California.
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The exterior of Yahoo! corporate headquarters in Santa Clara, California.

Maybe there's something to this whole second place thing.

This runner-up status.

Number 2 might be the new Number 1?

Just ask the folks over at Yahoo who have been panting for some good news, any good news, and with the recent, and surprising departure of Chief Technical Officer Ari Balogh, and the uncertainty that move certainly fostered, good news has been hard to come by in Sunnyvale.

That's why today's stock action in Yahoo shares is worth noting: I noticed that Yahoo is sitting pretty at a 52-week high. That's no small accomplishment for a company bloodied, beaten and bruised these past few years, and certainly the last several months that has born witness to not just Balogh's departure, but several key executives, including ad sales chief Joanne Bradford, and others. It all led BroadpointAmTech analyst Ben Schachter to warn investors a few days ago that "it is hard not to be concerned." Sure he continues to like the stock, citing the company's Asia investments as "the jewel of the company."

Analyst Scott Kessler at S&P reiterated his "strong buy" on the company that same day, saying Yahoo stands to benefit from a better global economic climate, new online ad spending, and a more focused management team -- at least among the managers who are left there.

Meantime, comScore now says that Yahoo is making headway against Google's search juggernaut, going from 16.8 percent to 16.9 percent of Search market share; Bing from Microsoft went from 11.5 percent to 11.7 percent. Both of those gains, slight as they are, came against a decline at Google from 65.5 percent to 65.1 percent. Tiny improvements to be sure, but against Google, even the slightest move in the right direction cannot be underestimated.

One month of slight gains certainly doesn't become the clarion call that Yahoo is "on its way." But it's another small piece of the Yahoo turnaround puzzle that is worth looking at.

And just today, marketing firm Efficient Frontier says search-ad spending will jump 20 percent this year, a hefty increase from its original forecast of between 10 and 15 percent.

There was also a backhanded complement, if you will, from Citi this morning. It was analyst Mark Mahaney's earnings preview on Google, which reports on Thursday. Citi is tracking an improvement in Search spending, and while that's instantly good for Google, it might also be incrementally positive for Yahoo. Further, writes that he sees "robust search spend growth" from marketing spending by Amazon , eBay , Expedia and Priceline , which again, offers more momentum for Google, and maybe an opportunity for Yahoo too.

Yahoo is still scrapping for crumbs. And Bing is still gaining market share. It's just that maybe there's more crumbs nowadays, or maybe it's the same number of crumbs, but they're getting a little bigger. Either way, the tide might be finally turning for Yahoo. We'll get a better idea when the company reports earnings next week.

The thing that gets my attention about today's 52-week high for Yahoo is that it's coming on very strong volume. That's a good indicator that this rally is for real, and might have some staying power. Yahoo's had a history of earnings disappointments, especially lately, so getting in now might be a little more risk than most investors are willing to take. Especially when you look at this company's valuation, which has always made little sense to me: Yahoo's trading at 30 times next year's earnings. Compare that to Google at 19 times; eBay at 14 times; or Apple at 20 times. Yahoo still seems pretty pricey, but its investment community has always tolerated this company's management, fiscal and market share vagaries with a patience almost unmatched at any other tech company.

I'm certainly not making an investment call one way or the other. All I'm doing is pointing out a stock, on the move, with what appears to be lots of support, and some good reasons why.

Could Yahoo actually be getting interesting again?

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