| Tech Stock News and Analysis |
|
|
| Monday, May 22, 2006 |
SAN FRANCISCO -- Shares of Yahoo rose modestly Monday, partly due to a positive column in Barron's that quoted a fund manager as saying those shares should be worth more than $40.
Yahoo (YHOO) rose 2% to $30.13 in early trading action.
By comparison, Google lost 1% to $366.55 in recent trading, a level that's still higher than its Friday intraday low of $360. EBay gave up 2% to $28
Cnet gave up 6% to $9.22. CNet said on Monday that its board has appointed a special committee of independent directors to conduct an internal investigation relating to past option grants. The special committee is being assisted by an independent legal counsel. CNet was responding to a May 16 report by the Center for Financial Research and Analysis focusing on stock-option grants awarded between 1997 and 2002. CNet was identified as awarding stock options with exercise prices close to 40-day lows.
It's unclear how widespread the scandal over stock-option grants is. CNet appears to be the only Internet company to be identified.
Yahoo cheap?
Yahoo shares are "insanely cheap," said Larry Haverty, a portfolio manager at Gamco, who was quoted in Barron's, which is published by Dow Jones, the publisher of this column. According to Haverty, Yahoo's price-to-earnings multiple is a relatively reasonable 35 times, based on a price that excludes cash per share of $1.70 and $8.50 for the value of Yahoo Japan and Alibaba. Of course, that price-to-earnings multiple assumes that Yahoo will earn 52 cents this year.
And, achieving earnings goals has been the challenge for many Internet companies, Yahoo notwithstanding.
Even though Yahoo didn't disappoint analysts with its first-quarter results, released in April, the search engine did not give an outlook that surpassed expectations.
Back in April, Yahoo said it expected to earn between $415 million and $455 million in operating income for the second quarter, before depreciation and amortization. That was weaker than some analysts expected.
Yahoo also said it expects to generate between $1.08 billion and $1.16 billion in sales for the quarter, excluding distribution costs, in line with expectations. Yahoo's full-year forecast was also in line with expectations, and the group said it expects to generate between $4.6 billion and $4.85 billion in sales in 2006. It said it expects to earn $1.915 billion and $2.05 billion in operating cash flow, or operating income before depreciation and amortization.
Arguably, Yahoo has many assets that Google doesn't. For instance, Yahoo has a stable of social media properties that may one day generate significant revenue, and is also trying to leverage its technology by creating interactive programming for traditional media partners. The result is that Yahoo's attracted an audience base that it can sell to advertisers.
For now, however, the money is in search marketing. And, that continues to be dominated by Google.
Once again, Google appeared to gain market share against Yahoo and others, such as Microsoft's MSN. In April 2006, Google gained in search market share for the ninth consecutive month and maintained its status as market leader with 43.1% of all U.S. searches conducted on its sites, according to comScore Networks. Yahoo remained in second place with 28%, while MSN ranked third with 12.9%. |
|
|
|
|
| Previous Post |
|
| Archives |
|
| Links |
|
| Powered by |
 |
|
