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Real Time Insight

 

After the close last night Yahoo! (YHOO - Analyst Report) beat the Zacks Consensus Estimate by $0.11 or 45%.  That follows a beat of $0.07 or 23% in the previous quarter.  That shows some true earnings momentum.

While search remains challenged, the company was able to deliver bottom line results through better margins.  

The new CEO, Marissa Mayer was joined on the conference call by the new CFO Ken Goldman and they discussed a broad vision for the company.  Mayer focused on mobile, content and partnering with other technologies to improve the user experience.  The other, and likely bigger point was the focus on using cash from the Alibaba transaction to buy back stock.

To me, it seems like this is a case of perfect timing for Marissa Mayer.  Carol Bartz started the initiatives to improve margins, which she did, but lacked direction and was burdened by a board of directors that could not pull the trigger on the Alibaba deal.  Fast forward through the Scott Thompson debacle and you have a tons of cash for a buy back and a more attentive board. 

Mayer comes in with margins moving higher, tons of cash on hand for stock buy backs and clearly has the full support of the board to put her stamp on the company.  Add it all up and it seems like she just cannot fail.  With the stock on the move from its $15 address of the past year, is now the time to get in on Yahoo!?

Should you:

#1 - Buy in, get long and get loud.  Maybe even switch search engines!

#2 - Wait and see, I want to see some search share improvements

#3 - Sell the news, this stock lives with a $15 handle, so any chance to sell it at $16 and change is free money.

Let us know what you think!

 

 

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