Yahoo Earnings Report Fails to Offer Any Inspiration
From a technical perspective, online media giant Yahoo (YHOO) and its management team are saying all the right words …words that investors should want to hear, citing optimistic plans for the future. After four years of turnaround effort that's not only failing to get traction but seemingly moving in the wrong direction though, the message is falling on deaf ears. YHOO shares are down following the company's not-terrible fourth quarter numbers. The impasse is simply the growing concern Yahoo doesn't actually know how to dig itself out of the hole it's in.
Last quarter, Yahoo earned 13 cents per share on total revenue of $1.27 billion. The per-share profit met analyst expectations, while the top line was better than the $1.19 billion the market had anticipated. Still, revenue minus traffic acquisition costs were lower by 15% on a year-over-year basis… even if they did roll in better than expected. Per-share earnings were more than cut in half from the 30 cents per share the company earned in the same quarter a year earlier.
In and of themselves, the numbers look forgivable, even if not great. For perspective, however, the company's Q4 results extend what's now become a two-year streak of falling earnings, with no plausible end in sight.
CEO Marissa Mayer remained upbeat during the conference call as well as in her comments portion of the earnings release, saying:
“Today, we’re announcing a strategic plan that we strongly believe will enable us to accelerate Yahoo’s transformation. This is a strong plan calling for bold shifts in products and in resources. We are extremely proud of the billion dollar plus business we have built in mobile, video, native, and social. Our strategic bets in Mavens have enabled us build an entirely new, forward-leaning business of tremendous scale and growth in just three years. The plan announced today builds from that achievement and will dramatically brighten our future and improve our competitiveness, and attractiveness to users, advertisers, and partners.”
Investors, however, weren't impressed or encouraged, as this quarter's Clarion call sounds similarly optimistic as past ones have been. If the prior turnaround plans aren't getting traction, serious doubts are surfacing that this batch will lead to different results. It's increasingly looking like a sheer matter of failed execution and poorly-conceived product development. Indeed, the vague message that it plans to "explore strategic alternatives" underscores the idea that the company doesn't really have what it believes to be a viable plan at all.
As for the stock, YHOO may dance dangerously close with a key support level at $27.20. Should that support break, the selling floodgates could really open.
YHOO Daily Chart
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