Wednesday, October 19, 2011

Yahoo Q3 FY 2011 - 2012 Result and Valuation Analysis

Yahoo Inc. has reported yet another disappointing quarter. The company reported 26% drop in its net income to $293 million for the July-September quarter, primarily due to lower advertising revenues.

The company posted revenue of $1.21 billion for the third quarter ended September 30, 2011, a 24% decline from the year-ago period.

Yahoo continued to witness decline in display-ad sales, which includes graphical, interactive and video ads on its various Internet platforms. The display revenue stood at $449 million in the quarter, almost flat as compared to $448 million for the year-ago period.

The internet firm has been struggling to increase its market share and the company recently sacked Carol Bartz as its CEO, presumably after failing in market gaining efforts.

According to media reports, private-equity firms such as Silvern Lake Partners are considering bidding for Yahoo. Besides, Chinese internet company Alibaba Group's head Jack Ma was reportedly said that he was "interested" in buying Yahoo.

For the current quarter, Yahoo expects revenue in the range of $1.28 billion to $1.4 billion. The company also projected income from operations between $200 million and $260 million for the fourth quarter.


For FY-12 the company is expected to report an EPS of $ 0.82. At the current Market Price of $15.5 the stock is trading at a PE multiple of around 19 times which seems to be a little expensive considering the company's deteriorating financials and market share.

52 week high low for the stock is $18.84 / $11.09.

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