7 reasons why Yahoo is interesting
1- Yahoo is mainly an infomediary1 and can also be qualified as an aggregator of content and a super broker. For example Yahoo offers consumer and experts reviews of some most popular IT gadgets while it is making money for the advertisement of merchandisers selling these products. It is a trust name both for buyers and sellers.
2- The corporate brand of Yahoo is strong and possesses a real franchise a la Do you yahoo?The company is a pioneer of B2C and search engine services. The company has recently launched a massive US advertising campaign to regain market share versus Google
3- The stock as an attractive valuation
VALUATION MEASURES
Market Cap (intraday): 34.60B
Enterprise Value (27-Sep-06)3: 32.66B
Trailing P/E (ttm, intraday): 29.54
Forward P/E (fye 31-Dec-07) 1: 37.95
PEG Ratio (5 yr expected): 2.09
Price/Sales (ttm): 5.79
Price/Book (mrq): 4.07
Enterprise Value/Revenue (ttm)3: 5.47
Enterprise Value/EBITDA (ttm)3: 17.628
Balance Sheet
Total Cash (mrq): 2.69B
Total Cash Per Share (mrq): 1.947
Total Debt/Equity (mrq): 0.086
Thus, M/B is only 4, P/E is 30 for a growth stock, debt is almost non-existent and cash is $2.7 billion. The stock is facing a significant correction compared to the last 5 years.
You can see in the graph that Yahoo had a more severe correction than Google recently, while issuing a warning that its revenues will be in the lower range of its prediction this year. The stock has largely outperformed the Internet stock sector in the past 5 years.
4- Recent key strategic acquisitions such as Flickr have reinforce the content packages and value of its search engine
5- Its innovation strategy is coherent and composed of a mix between acquisition and key new products and services development
6- The demand for information , entertainment and education content is very high, more recently for relevant and personalised content, and using high speed Internet.
7- The quality of the service My Yahoo finance is a real leader in its sector
3 factors which may attenuate its performance
1-The strategic choices of Google may impact significantly the growth and profits of Yahoo, since Google is sitting on a very large amount of cash. However, the Internet market of advertising is expanding in new avenues with high-speed Internet and there are definitely some places for several key players. While Google is the leader for accurate searches, Yahoo has more coverage of web sites, images and videos.
2-The US economic slowdown is decreasing the growth of Yahoo in advertising, but the company is engaged in many international developments such as the partnership/sub-contracting of its activities with a Chinese player in China.
3-The company may decrease the value of its brand image by overstretching its activities in many low added value products and services and having too many " Me-Too " products and not being a leader in those fields. It is a serious challenge for Google also.
Where reside the competitive advantages of Yahoo to sustain large profits?
Yahoo's corporate value resides in the daily retention of its customer's attention, with the selection of relevant content, entertainment and education products and services; with the right packages of personalised content offers.
The main challenges of Yahoo
1-Yahoo must try to not too overstretch its activities.
2-Not losing management concentration on low impact and non-strategic acquisitions
3-Not launching new products without leveraging breakthrough innovations and not betting the firm mainly on incremental innovations in the medium term is a main challenge in the dynamic Internet sector.
4- Profit from technology and market convergence by developing new key products and services and making selective key strategic acquisitions. Find an optimal mix of internal/external innovation for long-term profitability and to reinforce the business model while expanding in new delivery medium such as cellphone.
Conclusion
Our fundamental analysis told us that Yahoo has distinctive competitive advantages and has an attractive valuations compared to peers. A good strategy for buying a stock, or looking for a strategy model for your business is to find a company that can be managed by incompetent people and still make significant profits. Yahoo is one of these companies, while actual management is good . However, the Internet sector is in growth but more volatile which make risky those kinds of stock into your portfolio. Yahoo is one of the less risky Internet stocks in the world.
1 Definition of infomediary : by http://www.webopedia.com/TERM/I/infomediary.html
Formed from a combination of the words information and intermediary, an infomediary is a Web site that gathers and organizes large amounts of data and acts as an intermediary between those who want the information and those who supply the information. There are two types of infomediaries. Some infomediaries, such as Autobytel.com and BizRate.com, offer consumers a place to gather information about specific products and companies before they make purchasing decisions. The infomediary is a neutral entity, a third-party provider of unbiased information; it does not promote or try to sell specific products in preference over other products. It does not act on behalf of any vendors. The second type of infomediary, and one that is not necessarily Web-based, is one that provides vendors with consumer information that will help the vendor develop and market products. The infomediary collects the personal information from the buyers and markets that data to businesses. The advantage of this approach is that consumer privacy is protected and some infomediaries even offer consumers a percentage of the brokerage deals. The term infomediary was coined by John Hagel in his 1996 article entitled "The Coming Battle for Customer Information" in the Harvard Business Review.
Louis Rhéaume
Infocom Intelligence
infocom@videotron.ca
http://www.infocomintelligence.com/
1- Yahoo is mainly an infomediary1 and can also be qualified as an aggregator of content and a super broker. For example Yahoo offers consumer and experts reviews of some most popular IT gadgets while it is making money for the advertisement of merchandisers selling these products. It is a trust name both for buyers and sellers.
2- The corporate brand of Yahoo is strong and possesses a real franchise a la Do you yahoo?The company is a pioneer of B2C and search engine services. The company has recently launched a massive US advertising campaign to regain market share versus Google
3- The stock as an attractive valuation
VALUATION MEASURES
Market Cap (intraday): 34.60B
Enterprise Value (27-Sep-06)3: 32.66B
Trailing P/E (ttm, intraday): 29.54
Forward P/E (fye 31-Dec-07) 1: 37.95
PEG Ratio (5 yr expected): 2.09
Price/Sales (ttm): 5.79
Price/Book (mrq): 4.07
Enterprise Value/Revenue (ttm)3: 5.47
Enterprise Value/EBITDA (ttm)3: 17.628
Balance Sheet
Total Cash (mrq): 2.69B
Total Cash Per Share (mrq): 1.947
Total Debt/Equity (mrq): 0.086
Thus, M/B is only 4, P/E is 30 for a growth stock, debt is almost non-existent and cash is $2.7 billion. The stock is facing a significant correction compared to the last 5 years.
You can see in the graph that Yahoo had a more severe correction than Google recently, while issuing a warning that its revenues will be in the lower range of its prediction this year. The stock has largely outperformed the Internet stock sector in the past 5 years.
4- Recent key strategic acquisitions such as Flickr have reinforce the content packages and value of its search engine
5- Its innovation strategy is coherent and composed of a mix between acquisition and key new products and services development
6- The demand for information , entertainment and education content is very high, more recently for relevant and personalised content, and using high speed Internet.
7- The quality of the service My Yahoo finance is a real leader in its sector
3 factors which may attenuate its performance
1-The strategic choices of Google may impact significantly the growth and profits of Yahoo, since Google is sitting on a very large amount of cash. However, the Internet market of advertising is expanding in new avenues with high-speed Internet and there are definitely some places for several key players. While Google is the leader for accurate searches, Yahoo has more coverage of web sites, images and videos.
2-The US economic slowdown is decreasing the growth of Yahoo in advertising, but the company is engaged in many international developments such as the partnership/sub-contracting of its activities with a Chinese player in China.
3-The company may decrease the value of its brand image by overstretching its activities in many low added value products and services and having too many " Me-Too " products and not being a leader in those fields. It is a serious challenge for Google also.
Where reside the competitive advantages of Yahoo to sustain large profits?
Yahoo's corporate value resides in the daily retention of its customer's attention, with the selection of relevant content, entertainment and education products and services; with the right packages of personalised content offers.
The main challenges of Yahoo
1-Yahoo must try to not too overstretch its activities.
2-Not losing management concentration on low impact and non-strategic acquisitions
3-Not launching new products without leveraging breakthrough innovations and not betting the firm mainly on incremental innovations in the medium term is a main challenge in the dynamic Internet sector.
4- Profit from technology and market convergence by developing new key products and services and making selective key strategic acquisitions. Find an optimal mix of internal/external innovation for long-term profitability and to reinforce the business model while expanding in new delivery medium such as cellphone.
Conclusion
Our fundamental analysis told us that Yahoo has distinctive competitive advantages and has an attractive valuations compared to peers. A good strategy for buying a stock, or looking for a strategy model for your business is to find a company that can be managed by incompetent people and still make significant profits. Yahoo is one of these companies, while actual management is good . However, the Internet sector is in growth but more volatile which make risky those kinds of stock into your portfolio. Yahoo is one of the less risky Internet stocks in the world.
1 Definition of infomediary : by http://www.webopedia.com/TERM/I/infomediary.html
Formed from a combination of the words information and intermediary, an infomediary is a Web site that gathers and organizes large amounts of data and acts as an intermediary between those who want the information and those who supply the information. There are two types of infomediaries. Some infomediaries, such as Autobytel.com and BizRate.com, offer consumers a place to gather information about specific products and companies before they make purchasing decisions. The infomediary is a neutral entity, a third-party provider of unbiased information; it does not promote or try to sell specific products in preference over other products. It does not act on behalf of any vendors. The second type of infomediary, and one that is not necessarily Web-based, is one that provides vendors with consumer information that will help the vendor develop and market products. The infomediary collects the personal information from the buyers and markets that data to businesses. The advantage of this approach is that consumer privacy is protected and some infomediaries even offer consumers a percentage of the brokerage deals. The term infomediary was coined by John Hagel in his 1996 article entitled "The Coming Battle for Customer Information" in the Harvard Business Review.
Louis Rhéaume
Infocom Intelligence
infocom@videotron.ca
http://www.infocomintelligence.com/
No comments:
Post a Comment