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Thursday, January 29, 2009 

Yahoo results beat the street but the future looks dim

Yahoo's shareholders have suffered serious damages in its portfolio, since it was announced the end of the offer from Microsoft. Since then, the company has lost more than 50% of its value trading now around 12 per share. Despite having rejected the Microsoft offer the company is now also affected by the recession which is causing serious problems in the publicity business, adding to the effect caused by the strong rival Google. Last night, the company reported the results that surpassed analyst estimates. The company posted a net loss of $303 million thanks to the costs of layoffs and office closings and a drop in the valuation of its overseas properties, Yahoo said profit per share before those special items was 17 cents a share, up from 13 cents a share a year ago and considerably higher than the 12 cents Wall Street had forecast. For all of 2008, Yahoo earned $424 million, or 29 cents per share, on revenue of $7.2 billion. That compared with income of $660 million, or 47 cents per share, on revenue of $7 billion in 2007. For the current year the company is bracing for more bumps along the way. In its first-quarter forecast, management predicted the company's revenue may drop by as much as 16 percent from the same time last year. In a change from the company's past practices, Yahoo refrained from looking beyond March because the economy is so fragile. Investors will be now looking for the prospects and plans of the new CEO Carol Bartz, to determine what to do with its shares. The scenario is not bright for the company bracing for another disappointing performance in 2009, but Carol Bartz needs time to learn what Yahoo needs to do, so let her work.

Chart courtesy of www.stockcharts.com ( click to enlarge )

From a technical perspective, the stock reversed strongly to move to my short-term resistance at 12.10. The short-term outlook for Yahoo appears positive. The stock could touch an upside target of 13.57 in the medium term. The near-term outlook stays cautious till the stock closes conclusively above 12.10. Existing holders could remain invested with a stop loss at 11.82.

Disclaimer : Trading stocks involves risk, this information should not be viewed as trading recommendations.The charts provided here are not meant for investment purposes and only serve as technical examples.

That's all Folks. See you tomorrow !!!

AC

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  • I'm a 43 year old Independent Trader using proprietary technical analysis with more than 18 years experience of investing in the US stock markets. I started this blog in 2006 simply as a way to share my thoughts about capital, risk management, and trading. My blog contains only my personal opinion and is provided for informational purposes only.

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