Has YHOO Hit Rock Bottom?

Updated from 12:24 p.m. EST on Jan. 29.

Yahoo! (YHOO - commentary - Cramer's Take) reported numbers that beat on the bottom line but missed the top line and earnings before interest, taxes, depreciation and amortization (EBITDA) estimates. To make matters worse, the company lowered guidance for first quarter 2008 and full year 2008 as well on the revenue and EBITDA front as well.

Yahoo! reported revenue of $1.40 billion, EBITDA of $527 million and 15 cents per share in earnings vs. expectations of $1.41 billion, $523 million and 11 cents share, respectively. The company was able to beat earnings estimates due mainly to earnings from equity interests.

Yahoo! is guiding first-quarter 2008 revenue to $1.33 billion at the midpoint vs. expectations of $1.37 billion.

For full year 2008, Yahoo! said that revenue would be $5.65 billion at the midpoint and EBITDA would be $1.85 billion vs. consensus of $5.92 billion and $2.22 billion, respectively, for respective misses of $270 million and $370 million.

Most important, the lower revenue from the AT&T (T - commentary - Cramer's Take) renewed contract are going to flow 100% to margins, which, as a result, will lead to lower EBITDA and margins.

EBITDA margins in fourth quarter 2008 were 37.6%, down substantially from the 44.2% in the year-ago quarter.

Marketing revenue came in at $1.16 billion, up 14% year over year, while fees revenue checked in at $242 million, also up 14% year over year.

The company also announced that it will be cutting up to a 1,000 jobs, which will more than likely affect morale pretty badly.

With the bar set so low now, all the bad news out for the world to see, trading at a little over 9 times EBITDA and maybe even a buyout/strategic investment possible, Yahoo! could be worth looking at for long-term investors.

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At the time of publication, Somaney was long Google stock and Google calls, although positions may change at any time without notice.

Jay Somaney is a partner and fund manager with TSG Capital Partners, a hedge fund based in Plano, Texas, and founder of GlobalTechStocks.com, a subscription site that focuses on technology and Indian stocks (including ADRs), providing information, news and chatter. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Somaney appreciates your feedback; click here to send him an email.