YHOO: Hey Yahoo! Where’re the Revenues?
Yahoo! (YHOO) Reported First Quarter 2007 Financial Results and investors didn’t have to read far to find disappointing news.
Revenues were $1,672 million for the first quarter of 2007, a 7 percent increase compared to $1,567 million for the same period of 2006.
Consensus estimates were for $1.21 billion in sales – nearly 25% higher than Yahoo! reported. There is no way 7% year/year growth can support a 62x trailing P/E multiple. When the stock rallied in October on the imminent release of the new “Panama” search marketing system, we said:
Ultimately it will hinge on whether Panama is truly a better mousetrap. If it is (we’ll know in a couple of quarters) then yes, the worst is probably over. If Panama falls flat, however, things could get much uglier.
Given that the Panama system only really launched on March 30 it is a bit premature to say it has fallen flat. However, comments on the conference call that “we expect that this year our growth will be broadly consistent with the U.S. display market” (i.e. not the search market) suggest it isn’t particularly fizzy either.
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[...] So that’s where Yahoo’s revenue’s went. As we noted in our earnings preview, consensus expected $3.30 (non-GAAP) on $2.5 billion in revenue (net of TAC) this quarter and $3.41 on $2.63 billion next. Despite being twice Yahoo’s size, Google grew its revenues nine times as fast. The financial statements yielded virtually nothing worth criticizing, so we’re stuck with Google’s practice of not issuing guidance. For more information, see all articles on: Stock Market, GOOG, YHOO [...]
[...] Google’s results solved the mystery over the whereabouts of Yahoo’s revenues. With twice the revenue base growing nine times as quickly, there just isn’t much of a competition going on. The differences come through loud and clear when one compares the conference calls. Eric Schmidt [...]