For fun, I will respond to the FOOL ON THE HILL article by Dale Wettlaufer:
>Overall, the company is just amazing in its size and scope. Having
>worked for an Internet company for almost four years, I'm truly blown
>away by the pageview, unique visitor, and registered user numbers:
>310 million pageviews per day, 80 million unique visitors, and 65
>million registered users are all just stupefying numbers.
Since Dale Wettlaufer obviously believes these numbers to be true and meaningful, I can see how it would be pretty mind blowing.
What is the real significance of these numbers? Are they real numbers or self-serving numbers that generate lots of hype and are repeated over and over again in the Media and by Wall Street analysts? Why is someone at the Fool so willing to celebrate the statistics Yahoo is pumping out? What is a registered user? I know people who have registered at Yahoo 20 or more times.
When SI was a *free* site, over half of our registrations were people who had already registered before and were using a different computer or had forgotten their login so they were registering again. Many of the accounts created were people who wanted to post using multiple aliases. We were up to 160,000 registrations by April 1997 and would probably be over a million registrations today if we hadn't converted to a more responsible registration system.
What if Yahoo's real unique registered user count is only 10 million? (I have just dared to ask the question that few people are willing to ask... but it's a pretty important question).
>With the company priced at $685 per registered user and $556 per
>unique visitor, the static valuation metrics aren't off the edge of
>the earth here when you consider the growth of accounts.
If Yahoo has only 10 million real unique registered accounts, then the above valuation metrics would be a lot different... more like $4,000 per registered user. And what is a unique visitor? A unique visitor is someone who has clicked on at least one page of the Yahoo network of sites during the last month/quarter.
A great question for the analysts and Media to ask would be "How many active accounts does Yahoo have?" Would the real number of active accounts (used in the last month) be less than 10 million?
>In sum, while I can't deliver what I feel is a good estimation of the
>value of this company since I haven't worked on it, I don't think a
>market cap somewhere in the tens of billions of dollars is totally
>out of line. The assets are unique, the financial aerodynamics look
>very attractive, the growth is amazing, and the company has built a
>formidable moat around itself in terms of scope and scale.
A lot of descriptive hype words being used here : ) Yahoo's current valuation based on 263.8 million fully diluted shares is $43.4 billion. For Yahoo to be valued at 100 times earnings someday (still a higher P/E than Microsoft or Cisco), Yahoo will need to produce $434 million in real annual after tax net income. More stock dilution: At the current price of $164.438, Yahoo's market cap will expand to about $50 billion once Broadcast.com is combined with Yahoo. As an individual investor, what is your risk/reward scenario with Yahoo? Is it what the analysts lead people to believe?
>The "value" people can complain about the static valuation numbers
>all they want in their articles and fund annual reports, but unless
>you've really put your nose to the grindstone on working out the
>value of this company, I think it's naive to claim right off the top
>of your head that this is definitely overvalued.
Dale Wettlaufer hasn't presented much in the way of projections for Yahoo's revenues and earnings going forward, so his piece here is a pretty static look at Yahoo. |
