Company earnings reports involve a lot of numbers. Unless you’re a student of Wall Street, or are following a company closely, it can be hard to decipher exactly what these numbers mean. Usually a good way to know how well a company did is to look at a stock price once the numbers are out. Last week we saw Google soar through the roof, going up over 20 percent upon beating estimates. Today, Yahoo’s stock is going up and down in after-hours trading — these swings are canceling each other out. This reflects Yahoo’s financial performance: decent, but nothing special.
This is important because many analysts and stockholders were looking to Yahoo’s numbers last quarter to see if there was something there that would allow the company to fend off Microsoft’s hostile takeover bid. Yahoo may have bought itself a little bit more time today by beating estimates, but the numbers simply weren’t good enough to throw away a $40+ billion dollar deal (which Microsoft is offering).
For those who like the numbers: Yahoo reported $1.35 billion in net revenues ahead of the $1.32 billion Wall Street estimate. Net revenues were up 14 percent from the year-ago period. Earnings per share came in at $0.11, ahead of the estimate of $0.09. However, Yahoo’s $121 million operating income was a decrease of 28 percent from 1Q 2007.
So the next question is: did Yahoo have a good enough quarter to make Microsoft raise its bid? Microsoft chief executive Steve Ballmer earlier today said he would not be raising the bid no matter what Yahoo reported today. However, as we’ve said previously, if it will get the deal done tomorrow without all the hostility, don’t be surprised if the bid goes up a few dollars a share.
Yahoo chief executive Jerry Yang also said during the earnings call today that the company was “raising our cash flow guidance for the year.” (see the chart below) Statements such as this make a compelling argument for why Microsoft perhaps should up its bid.
Yang did not shy away from the lion’s mouth. As soon as he got on the earnings call, his first main point was talking about the Microsoft bid. He spoke about his and the board of directors’ feelings that the bid vastly undervalues Yahoo. That said, he did say that all options were still on the table, “including a sale to Microsoft.” Yang promised the company was working hard to find a solution that would maximize stock holder value.
Just as Google did last week, Yahoo declined to elaborate on the two sides’ recent search advertising deal. Yahoo president Sue Decker said that it was premature to speculate on whether some sort of permanent arrangement with Google may come of this, as has been widely reported.
Other things of note from the call and report included an emphasis on international strength (just as Google did last week), an optimistic view of growth despite the weakened U.S. economy and a bullish outlook on mobile technologies/growth.
It’s been about two and a half weeks since Microsoft said it was giving Yahoo three weeks to enter into acquisition negotiations. Failure to do so would result in a hostile maneuver — quite possibly at a lower value than the current offer. The deadline comes on Saturday.
Tags: co:google, co:microsoft, co:yahoo5 Comments
-
Joe Schmoe said:
MG–
Given that you have no finance experience at all, why do you insist on muddying the blog with lame summations of finance related stories. Either hire someone with at least a year’s worth of banking or stick to what you know
-
MG Siegler said:
@joe - the point of these articles is to look at the bigger picture of what is going on in the industry, specifically with YHOO/MSFT/GOOG, not so much the numbers themselves. I’m not telling you to buy or sell these companies, just how their hitting or missing financial benchmarks effects both them and industry as a whole in the larger context.
That said, I feel I do have a pretty good track record with pieces I’ve written dealing with financials and how they’ve turned out in the end.
Was there something in particular you took exception to? I’d be happy to discuss.
…and for the record, I have worked at merrill lynch, though it was several years ago and not for quite a year.
-
Joe Schmoe said:
My point is that this news is commoditized, and to keep me as a reader as you guys expand, you need to focus.
As for particular points, the comment on Blockbuster being lower than Circuit City struck me as odd, given Blockbuster is down more than CC over the past year. On the Apple earnings, things like “Overall revenue growth was up 43 percent from the previous year.” Its actually revenue that is up 43% QoQ, not revenue growth.
-
Anthony Ha said:
@Joe Schmoe: “To keep me as a reader as you guys expand, you need to focus.”
Thanks bringing up this concern — it’s definitely something we’re wrestling with, and we need reader feedback to know when we’re screwing up. That said, it’s pretty clear to me why this news is very relevant to our core readership of VCs and entrepreneurs. It’s fair to point out ways we can be covering this stuff better, but you’re going to have a hard time convincing me we shouldn’t cover it at all.
I was also baffled by this comment: “Either hire someone with at least a year’s worth of banking or stick to what you know.” Look, it’s fair and essential to expect us to know what we’re talking about. But complaining that MG doesn’t have a year of banking experience is pretty silly. By this standard, VentureBeat’s crew of bloggers and journalists shouldn’t cover anything other than blogs and newspapers.
-
MG Siegler said:
@joe - for the revenue vs. revenue growth, that was simply a mistype. sorry, it happens. I corrected. thank you.
For BB vs. CC I’m still not sure what you mean by that. If BB is down more over the past year than CC are they not lower? Maybe you mistyped and meant that CC is actually down more than BB this year - which is true, but I’m not sure I said anything to the contrary.
I did say “Circuit City’s stock was trading at just under $4-a-share before the deal, Blockbuster’s was even worse, closer to $3.” Which is true.
3 Trackbacks
2:42 am
股市看淡雅虎第一季度财报 | SilenceWolf said:
[...] each other out. This reflects Yahoo’s financial performance: decent, but nothing special. Read more. addthis_url = [...]
2:49 pm
Boom! Apple blows past expectations. One more thing: Future outlook on the low end » VentureBeat said:
[...] the recent Google and Yahoo quarterly financial results were largely based around more abstract ideas such a paid-clicks, the [...]
4:00 pm
Microsoft earnings watch: more Yahoo bluster, Xbox business profitable » VentureBeat said:
[...] a share stock price and that Yahoo’s financial condition continues to decline. (Although Yahoo beat expectations earlier this week.) He said Microsoft would consider its options if Yahoo doesn’t respond by Microsoft’s [...]