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Strategies & Market Trends : The New Economy and its Winners
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To: Bill Harmond who wrote (11100)4/11/2002 4:57:20 PM
From: Bill Harmond  Read Replies (2) of 57684
 
Bottom line from analyst reports (Merrill, Goldman, Robbie Stephens) I read is that Yahoo's results aren't good enough to sustain the multiple. It's pretty clear that Yahoo is now being compared with traditional media and these analysts are seeing too large a premium to that sector...especially in light of the soft and unproven online advertising market.

The analysts I read think that the company made solid progress this quarter, but it just isn't promising enough. One went so far as to caution that Pittman's return to AOL must signal bad things (and why not, since the Street is effectively valuing America Online at zero), another took out the Overture paid listings deal in projections like it's some kind of one-time event.

I'm not buying this, though these are certainly the sentiments that prevail. Yahoo's billings among the biggest advertisers have not gone down in the past year, and I know how quickly money can surface. Granted online isn't television, but the operating leverage allows any improvement from here go straight to Yahoo's bottom line. Add to that all the non-ad initiatives and I think upside is far more likely.

No matter how you slice it the opportunity ahead is far greater for Yahoo than any traditional media company, especially now that it stands unchallenged in the portal space.
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