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WatchMojo NewsletterThis comes from Motley Fool.
“It is a great time to be an entrepreneur, because people are playing on a bigger playing field than ever before with the Internet…
Amen.
After the dot com bubble burst, many quality companies had to raise from the ashes, and like a phenix, Terry Semel helped pull Yahoo! out of the ashes. The moment of validation, I think, came in Q1 2004 when investors pushed up the stock some 10-15% - and a stock split - after it announced a sharp rise in revenues and profits.
As much as Terry Semel deserved a lot of credit, at the time, I think a lot of people laid too much of the credit at the feet of Mr. Semel. Similarly, some are now perhaps putting too much of the blame for Yahoo!’s woes on Semel. The fact that this comes from none other than Mad Money’s Jim Cramer speaks volumes. Cramer argues that the stock would pop from $24 to $28 if Semel were to announce his resignation.
Of course, there is no word that Semel is leaving to go anywhere anytime soon… but as a big fan of Yahoo! and a shareholder, I must say: something is wrong with Yahoo!
Is it?
For short sighted stock speculators, it is worth mentioning indeed that the stock is now sitting at the bottom of its 52-week range, at $24, far off its $43.66 peak over the past 12 months (of by over 45%).
The odd thing is that while everyone is hyping up online advertising, it should be noted that Yahoo! is the best positioned company to benefit thereof: it can take advantage of all forms of online advertising (display/banners, video, search, etc) whereas most of its competitors cannot.
Oh, it’s also printing money: Yahoo! is doing quite well, in the first 6 months of 2006, Yahoo! generated over $300 million in profits on over $3 billion in revenue!
Of course, it is not growing as fast as “you know who”, nor does it have as juicy margins, but the variance in growth and margin does not, if you ask me, justify Google being worth $120 billion to Yahoo!’s $30 billion.
Is Google worth four times more than Yahoo! That steep discount is why I am a Yahoo! shareholder. I can confidently say that in 1, 3, 5, 10 years, Yahoo! will be worth more than it is today; while I suspect that so will Google, I am less confident about making that claim (though if they will be, I think they will be worth far, far more - hence the risk/return analysis at its best).
And as a shareholder, I must say that despite’s Mr. Semel’s status as a great executive, it is true that Yahoo! needs someone perhaps more agile, younger, with more energy, who lives and breathes the Web.
Think about it: when Yahoo! needed to rise from the ashes, it brought in a turnaround artist: Warner Bros.’ Semel. I certainly think that Mr. Semel should remain on as Chairman, maybe even CEO, but looking at the folks making up the company’s depth chart, I expect that they could benefit from someone who is willing to move at Web speed to make things happen. This has nothing to do with matching and beating Google’s bid for YouTube, or closing Facebook; it’s about finding out early what the next hot trend is going to be and leveraging Yahoo!’s enormous size, or, as they did with Deli.cio.us and Flickr, acquiring a company early enough before it gets hot and a bidding war ensues.
Perhaps that is the problem: Yahoo! is a bit too much on cruise control, which is not a bad thing, until you look at its stock!
It is certainly not too late for Yahoo! to turn things around and finish off strongly in Q4.
Disclaimer: I own shares in Yahoo! and will probably buy more after their presumedly lacklustre Quarterly report, but that does not mean that you should too…
Interesting read from Mediapost.
I doubt News Corp.’s otherwise experienced and savvy management could be this dumb, small-minded and oblivious to how the Web works and what has made social networks popular.
Sure, securing YouTube would have propelled News Corp. further up in the Web stratosphere, but it would not have made sense for News Corp. to acquire YouTube. It makes much more sense to further build up MySpace Videos… but, if News Corp. is considering removing all YouTube videos from MySpace, then indeed News Corp. is going to make all of those people who said that News Corp. would ruin MySpace after buying them prove to be right.
To see why and how YouTube/Google and MySpace have already cornered the video file sharing space and what it means for incumbents, click here.
Disclaimer: as of this writing, News Corp’s FIM is involved in an ongoing litigation matter with our company.
Looks like we’re not the only ones calling for RSS to take off in 2007. Read more on this blog.
Ironically, read about McAfee’s CEO on CNET’s News.com, obviously a no sign about Shelby Bonnie’s departure there…
Neil Ashe, CNET’s head of strategy, replaced the legendary Bonnie as CEO, the San Francisco-based company said today in a statement. The Internet news and information provider also lowered its third- quarter and full-year revenue forecasts, in another statement.
For that, check out this link.
I’ve bought and sold CNET shares for a while, thinking that it’s an interesting portfolio of Web assets and a likely M&A takeover target. Ironically, the one thing that I thought stopped a deal was not the sale price but rather Bonnie’s desire to remain autonomous. I’ve never met him, but can imagine him not liking following a superior. I bought in the $9 range, saw it slide to $7, and sold shares at $12 last year. This year, I bought again at just under $8 and sold this morning off a modest gain (for my previous assessment of CNET click here).
My thinking is this: indeed, this makes CNET more likely to sell, but the stock price already makes the company worth $1.4 billion. Despite all of its hoopla, YouTube sold for $1.65 billion… I do not see how anyone would pay $1.5-2 billion for CNET… and the fact of the matter is that despite how much I like their portfolio of assets, the downside is greater than the upside - at these prices.
Mind you, YouTube had a shaky business model. CNET is relatively healthy: CNET expects to report third-quarter sales of about $92.8 million, below the $93 million to $96 million forecast earlier. It said that full-year sales are expected to be in the range of $376 million to $386 million, down from as much as $403 million forecast earlier. The company said full third-quarter results will be delayed because of the continuing options probe.
But, my take is that the uncertainty might pummel the stock a bit, if it tips below the $8 range again, I’ll probably buy again. But if you like a nice speculative play, CNET is a good one to look at, since the chances of a takeover are higher without Shelby at the helm…
Here is what Forbes.com has to say, read more.
Read our own analysis here.
Short answer: Newspaper companies won’t go anywhere, though the delivery of choice might have to change…
PLAY
