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Tuesday, July 18, 2006

Yahoo! Pulling Web Shares Lower After-Hours

Yahoo! (YHOO) is trading down over 8% around $29.50 after reporting its earnings. This puts it within striking distance of its $28.60 lows seen over the last 52-weeks. It earned $0.11 EPS as expected, but ex-TAC revenues (ex-Traffic Aquisition Costs) and guidance are the issues.

YHOO's Q2 revenues on an ex-TAC basis were $1.123B versus consensus estimate of $1.141 Billion. The total revenues before stripping out the Traffic Aquisition Costs were $1.576 Billion.

YHOO guided its Q3 revenues on an ex-TAC $1.12B to $1.23B versus consensus estimates of $1.20B and guided Fiscal Year 2006 revenues ex-TAC at $4.6B to $4.85B versus consensus est of $4.79 Billion.

With such a high amount of acquisition costs ($453 million), this makes you wonder if that is because Google (GOOG) is sucking the money away or if Google is also having to spend this much for web traffic also. We'll find out on Thursday when Google reports. Google is "currently" expected to post EPS at $2.21 and revenues of $1.65 Billion, but the quotes are to signify that you should expect estimates to change now that we have seen the YHOO numbers. GOOG is trading down another 3.4% to about $389.50 after the disappointment seen in YHOO.

Jon C. Ogg
July 18, 2006
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