From Briefing:
14:15 ET ******
Yahoo (YHOO) 193 3/4 +7 9/16 Yahoo issued three press releases last night, one about their earnings, one about a 2-1 stock split, and one about the sale of $250 million worth of stock to SOFTBANK Holdings, Inc.. What will Yahoo do with the $250 million? It's profitable on operating basis and already had $147 million in cash, and only spent $5 million last quarter on new product development. Aside from acquisitions (which could be done with stock), marketing seems the likely choice. Since we haven't seen anyone look at this today, (everyone is focused on the earnings number and split), we did a quick calculation of where some of the portals stand with marketing budgets, cash, and debt. All numbers in millions.
Stock (MRQ) Rev Mktg Mktg/Rev Cash Debt
YHOO (6/30) 41.2 20.0 48.5% 147.2 (397.2)* 0
AMZN (3/31) 87.4 19.5 22.3% 116.8 (366.8)** 76.5 (326.0)
AOL (3/31) 693.6 84.1 12.2% 924.0 374.0
LCOS (3/31) 15.1 10.2 67.5% 39.6 0.2
* (Number in parentheses represents estimate after adding the $250 million from Softbank.)
(AMZN sold $326 million of notes on 5/8 which will retire the 76.5 debt. Current status, estimated, is shown in parentheses.)
Yahoo clearly strengthened its financial condition, yesterday. The striking thing about this comparison is that AOL's marketing is just four times larger than YHOO's, despite AOL having 17 times the revenue. The other striking thought is that maybe Amazon should forget worrying about Barnes and Noble, and start worrying about Yahoo. Lastly, poor LCOS clearly needs some cash to keep up with these boys. Here's betting that January's Superbowl has high-power ads from Yahoo and Amazon, as the marketing battle is probably just beginning in the fight for Internet dominance.
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