Talk about a tumultuous quarter.During its fourth quarter, Yahoo! ( YHOO) saw the leak of an
For the full fiscal year, analysts are expecting earnings of 46 cents a share on revenue of $4.55 billion. But along with the numbers, investors will be playing close attention to Yahoo!'s outlook for Panama, a new advertising system the Internet giant has begun to roll out that is expected to have its most critical component introduced in the first half of 2007. A new algorithm, the component will let Yahoo! display ads by search queries based on the likelihood that they'll be clicked on, along with the amount bid by the advertiser. The method is intended to help Yahoo! close the gap in the amount it makes per search with leader Google ( GOOG). "The back-end implementation -- a new ranking algorithm for paid search results -- seems like low-hanging fruit for increasing search monetization beginning in Q207," wrote American Technology Research Rob Sanderson in a report released Monday. "Any comments on timing will be important for the stock, with mixed conviction regarding management's previous expectation for a Q1 launch," Sanderson wrote. Investors will be looking for reassurance that already-delayed Project Panama remains on track this time. Still, Yahoo! will likely play it safe when providing guidance for 2007, as it switches to Panama and as senior management posts remain open, wrote Merrill Lynch analyst Justin Post in a research report Monday.
"We expect Yahoo! to provide conservative initial guidance for 2007 to reflect Panama-transition uncertainty, especially with ongoing CFO search and guidance credibility issues stemming from 2006 underperformance," wrote Post, who expects Yahoo! to provide guidance of around $5.23 billion for 2007, a gain of 15% year over year. Post's firm makes a market in Yahoo! shares. Even if everything is going smoothly with Panama, it is tough to say how much of a difference it will make to Yahoo!'s revenue. Post wrote that this could fluctuate between $100 million and $300 million for 2007, and he expects Yahoo! to offer a wide revenue target. Along with closing the search-monetization gap with Google, investors also will be listening for updates along the two other fronts -- social media and mobile -- that CEO Terry Semel said in the last earnings call were key issues for Yahoo!. The company saw new developments along both dimensions over the last quarter and believes that its huge user base and large reservoirs of content can help it dominate these emerging areas.
online contest-creating start-up Bix in November and blog network Mybloglog in January. Investors will want to know how the start-ups will contribute to Yahoo!'s overall vision for the evolving social media space and clues for what other types of companies could be snapped up over the next quarter.
Snapping Up Social MediaThough Yahoo!'s reported attempts to acquire high-profile social media stars such as Facebook continue to be thwarted, the company did pick up
In January, Yahoo! launched a new mobile-search technology called OneSearch, which lets users browse the Web in a simpler format designed with smaller mobile devices in mind. While it is too soon for any major progress updates of the service, investors will look for Semel to expound on how the service can be tied into Yahoo!'s overall service and a more detailed plan for mobile in 2007. Finally, investors will look for hints of whether the CEO is planning to let go of the reins and how the rest of the senior management team -- Yahoo! is seeking a CFO as well as a head for its audience group -- is shaping up. Semel recently said he has no immediate plans to retire, but investors and analysts have tended to react positively to the increasingly prominent role played by Sue Decker, the company's former CFO who now heads up the crucial advertisers and publishers group. Widely viewed as the successor to Semel, a plan for how Decker might rise to the top spot could signal to investors that serious change is finally afoot at Yahoo!.