Yahoo! Inc. (YHOO): Marissa Mayer Is Doing It Right

Internet innovator-turned-dinosaur-turned-innovator Yahoo! Inc. (NASDAQ:YHOO) reported results this week that crushed analyst estimates on the bottom line, but fell short on revenue and guidance. This sent the stock down five points early, but it recovered most of it by the next day. In the continued turnaround of the company, Wall Street has again failed investors with shortsighted opinions. Yahoo!’s growth may indeed be slower than we want it to be in the coming months, but that doesn’t speak of the company’s recent accomplishments, nor of its long-term outlook. Here’s why Yahoo! is still a great company to own.

Yahoo! Inc. (NASDAQ:YHOO)Earnings recap
For the first quarter of 2013, Yahoo! Inc. (NASDAQ:YHOO) brought in more than $1.1 billion, not including traffic acquisition costs. This number comes in roughly flat with the prior year, and missed analyst estimates. Adjusted EBITDA of $386 million was flat, as well, though the bottom line’s non-GAAP number of $0.38 per share comes in at a sharp increase to the prior year’s $0.27, and beat Wall Street’s expectations.

During the quarter, we saw a brand new Yahoo! Inc. (NASDAQ:YHOO) main page, a new partnership with Dropbox making the email app better for sharing and attaching files, and four acquisitions in the mobile space. The company even aired its own original series, ala Netflix, Inc. (NASDAQ:NFLX), called Burning Love — a dating show spoof. In just one year, the company shows a much more enlivened and interesting business. It may not have wowed investors with the immediate numbers, but this is clearly a business in the midst of a renaissance. Most other businesses conducting such an overhaul incur short-term losses, but Yahoo! seems well beyond that at this point.

Ad numbers were weak – down 11% from the year-ago quarter. While this isn’t what we would ideally like to see, the company has many other revenue drivers, and I believe the Street put too much importance on this segment.

Where things really went south for the release was in guidance. For the second quarter, the company is expecting just shy of $1.1 billion, again with traffic acquisition costs factored out. The Street was looking for $1.11. Doesn’t seem like the end of the world to this Fool.

What to look for
Yahoo! Inc. (NASDAQ:YHOO) grew its mobile user count to 300 million this quarter. At the end of 2012, that number was 200 million. To point out the obvious — that’s a tremendous win for the company. To point out another obvious — mobile is a much more exciting future than display ads, so why are analysts kvetching over dwindling display ads? Yahoo! has much greater goals than that.

Moreover, the company’s stake in Alibaba could send shares higher with an IPO right around the corner. Some analysts believe it will come out of the gates with a value of $80 billion. Another Asian property, Yahoo! Inc. (NASDAQ:YHOO) Japan, is not yet monetized, but is worth billions more. The result leaves Yahoo!’s core business — its forgettable display ads — as a very small piece to a very big company.

In short, investors are wise to look beyond the Street’s myopia into Yahoo!’s future.

The article Marissa Mayer’s Yahoo! Is Doing it Right originally appeared on Fool.com.

Fool contributor Michael Lewis has no position in any stocks mentioned. The Motley Fool recommends Netflix, Inc. (NASDAQ:NFLX). The Motley Fool owns shares of Netflix

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Countries with the Highest Suicide Rates

The 10 Most Technologically Advanced Countries in the World

The 10 Safest Countries in the World to Live in Peace

The 10 Top Selling Smartphones in the World 2014

The 12 Biggest Shopping Centers in the World

The 10 Friendliest Countries in the World

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!