All eyes will be on Yahoo (NSDQ: YHOO) tomorrow, as the company releases earnings for its first full quarter of the post-Semel era. The analyst consensus, according to Reuters, is for the company to show revenue of $1.24 billion, up 10 percent, while income is expected to fall by 28 percent. A few Wall Street reports have trickled out ahead of the announcement, painting a mixed picture of how Yahoo is executing on turnaround plans.
RBC/SearchIgnite: Slight gains for the company in terms of ad spending and performance. Marketers seeing improved ROI on Yahoo, leading to higher CPC rates in September compared to June. Total search spending, across SearchIgnite’s client base was up 20 percent year-over-year at Yahoo, beating Google’s (NSDQ: GOOG) 7 percent growth. Excluding new clients, ad spend grew by 7 percent vs. 0.8 percent at Google. Altogether, Yahoo’s share of total search spending jumped from 18.5 percent in q2 to 20.4 percent this past quarter. Report Summary.
Deutsche Bank: Analyst Jeetil Patel sees continued weakness at the company, stemming from declining search volume and a year-over-year traffic decline of 9 percent. The firm has a revenue estimate of $1.26 billion, slightly ahead of consensus, but it feels this number could be at risk. Patel also draws attention to the coming end of Yahoo’s relationship with AT&T (NYSE: T) in early 2008. While the deal may be renewed, Yahoo may only stand to collect ad revenue from AT&T subscribers, rather than any per-user fee, further pressuring earnings.
Bernstein: Analyst Jeff Lindsay, who recently performed a controversial breakup analysis of the company, sees revenues of $1.21 billion, slightly below consensus, although mainly he’s looking to hear some indication of major organizational changes And just for irony, he thinks that all of the focus on the internal review could cause a slip in performance resulting in more weakness through the rest of the year.
In a typical quarter, investors would be mainly focused on the numbers, looking at exactly how the company fared relative to expectations. But the meat this quarter will be the management’s discussion, in the release and on the call, of what the company has actually done to right the ship.
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