Happy Girl,
A few responses.
1. On the one share issue -- when I buy again I hope it will be more than that! I was not watching the intraday prices very closely yesterday as it was my first day back in the office, so I didn't see the dip until after it was over. Even so, I have Principles, remember? And right now, I believe that YHOO will hit 150 within the next few months, and may go lower than that. One possible wake-up time will be the early Jan. earnings announcement. That could drive the price down, in that it could focus people on the fact that this company doesn't yet make much in the way of profits. OOTH, I expect the revenue growth will be healthy, the page views growing, and a stock split announcement at that time is certainly possible. So maybe we will see 250 before 150. But I still think we'll see 150 next year (or 75 post 2-for-1 split). And when we do, I'm ready. Patience. (I am sorely tempted to day trade it a little, however. But that wouldn't really count, would it?)
2. You wrote: "Do you agree that Asia is an untapped gold mine ? With PC prices becoming more affordable, India's middle class is buying home computers. Imagine the potential for expansion in such a country. There currently exists virtually no service, even in its fragmented form, which can provide road maps, restaurant guide, auctions - you name it. Agreed there are low barriers to entry, and high tech resources are cheaper, what India lacks big time is the ability to initiate and bring it all together. Do you see the advantage YHOO would have if it decided to move east ?"
India is a very troubled potential gold mine, IMHO. Setting aside the usual garbage about overpopulation and starvation, which don't really apply to this issue except to the extent that they restrain overall economic growth, the country still has major infrastructure problems which it unfortunately lacks the resources or economic climate to address quickly. I think they'll be able to afford the PC's before too long (still will take a few years for large market penetration though), but the number of phone lines is still abysmally low, and the latest five-year telecommunications plan only begins to address the problem. They could use a deregulated -- and corruption-free -- competitive phone company environment with an open invitation for technologically sophisticated foreign companies to come in and wire them for the new millenium. But foreign companies aren't going to do that unless they perceive stability and a governmental willingness to allow them to take large profits home. Do you see those factors in place? I don't. (Companies in other industries -- e.g., Enron -- have discovered that large scale commitments in India have to be made with the understanding that a change in the political climate could jeapordize the entire investment.)
Middle class eyeballs: The middle class's size, although estimates vary depending on your definition of "middle", is not usually considered larger than the U.S. middle class and is smaller than Europe's middle class. And the upper-middle class, which is really the advertising industry's most desired target in any marketplace, still leaves in larger numbers than is healthy for the country they are leaving behind (it's been great for the U.S. though -- a principal driver of the revolution we are witnessing and enjoying). And I have argued before that advertisers care less about eyeballs than they do about wallets. When a shopping center developer goes to build a mall, what is the first thing (s)he studies? The *disposable income* of the surrounding area. Not just the population, the income. Advertisers also want to know about the disposable income of the audience they are reaching. The WSJ is constantly surveying how affluent its audience is so that it can extract advertising premiums from its advertisers. Is it likely that YHOO or anyone else will be able to extract such premiums in India? Or will they have to offer discounts to offset the lower disposable incomes? Also, people with lower disposable incomes tend to better targets for mass market advertising of low cost items. And I don't think the Net will turn out to be the best way to deliver those messages.
Would YHOO be allowed to put it together? (By the Indian government, I mean.) I suppose the benefit of cyberspace may be that the Indian government won't have much say, but my guess is that they'll find some way to regulate the content, the advertising, something.
There are certainly some positives, though. To start with, a lot of eyeballs. Second, a lot of talent, particularly professional and technical talent. The ability to tap that talent resource without taking away the people themselves from India has only recently arisen. It is that trend which, I believe, holds out the biggest hope for India's future as a YHOO marketplace and as an economic force in the world economy. Third, many who leave India never really leave. As the Net makes it easier for them to remain "Indian", you may -- already do, to a limited extent -- find them as entrepreneurs spurring development of the necessary infrastructure to make the opportunity for YHOO and other Net businesses real.
For current YHOO investors, though, the question is: will any of that happen soon enough to justify factoring it into the current price of the stock? I think the answer is: Not yet, but stay tuned.
MAD DOG |
