What I Didn't Like About Yahoo!'s Call

 | Apr 18, 2012 | 2:30 PM EDT  | Comments
  • Comment
  • Print Print
  • Print
Stock quotes in this article:

yhoo

,

goog

,

msft

There were several positives in Yahoo!'s (YHOO) earnings call Tuesday, including:

  • Revenues increased for the first time since 2008.
  • Search revenue surprised and was up.
  • Yahoo! is talking to Alibaba again about monetizing part of its stake.

But there were many negatives on the call that left me dissatisfied.

  1. CEO Scott Thompson is now 90 days on the job and still speaks in too many platitudes. "We need to move faster. We need to get closer to our customer. We need to use our data." Somewhere Carol Bartz is screaming right now saying, "This is who you got to replace me?" Come on. Thompson can say that about any business. Let's get into the nitty-gritty.
  2. Search revenue was up, which was a surprise, but we need more details about why. Apparently, it's because the 1800 search people at Yahoo! who work on the "front end" did something that yielded a better click-through rate. But was that it? Why didn't they do that in the last two-and-a-half years? It seemed like revenue per search was down. The cost-per-click seemed to be up, which counters Google's (GOOG) recent quarter. How much did Microsoft (MSFT) pay up as the revenue guarantee to help make the numbers? We need more answers.
  3. The Microsoft relationship in search seems to be a failure. Thompson pointed out that he was directly involved in discussions to improve things. Yet, we don't know what the alternatives are for him: Does he cancel the deal and go to Google? Is that possible? CFO Tim Morse talked about how Microsoft has been working very hard to close the revenue-per-search gap, but it has been the same story for two years.
  4. Thompson gave a simple answer to the question of what's going on with the Facebook suit over patents. An analyst tried to assess if he was open to doing an AOL-type (AOL) of settlement. There was no nuance in Thompson's response: "They have to pay up." As an investor, that's way too simplified to make me happy that Thompson knows what he's doing on this front.
  5. Display was down 4% quarterly. Yahoo! argued that the second quarter is looking better, but Display is the real bedrock of Yahoo!'s core. They didn't offer any explanations about why it was down and what they were doing to change that other than "get closer to the customer."
  6. The Softbank talks are off over the Yahoo! Japan stake. Yahoo!'s 35% stake of Yahoo! Japan is worth $6.4 billion today according to its stock price. I guess Softbank doesn't want to pay the market price and Yahoo! does. It would be great to get that cash back and into the hands of shareholders.

It's time for all the talk from Scott Thompson to turn into action.

Editor's Links

More on Technology:

BEST IDEAS

REAL MONEY'S BEST IDEAS

Columnist Tweets

BROKERAGE PARTNERS

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.


TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.