Yahoo had a perfectly respectable quarter -- results topped expectations, sales were up, and the company backed its revenue outlook for the year. And now shares are trading down close to 2 percent -- what gives?
The problem was that the bar was set so high that no matter what Yahoo delivered, investors would have been disappointed. Just beating expectations wasn't enough.
"They would have had to beat their own guidance [to impress the market]," says Bernstein Research analyst Jeffrey Lindsay. "They guided for between 17 to 18 percent revenue growth, and they came in at 14 percent [excluding traffic acquisition costs], and it wasn't enough to convince investors that Yahoo is on the road to a solid recovery."
In a way, Yahoo's predicament is similar to that of Hillary Clinton (as Epicenter editor Dylan Tweney pointed out). Even though Clinton won the Pennsylvania primary, conventional wisdom is that she's still just buying time.
And given that Microsoft set a Saturday deadline for a deal to close before it goes hostile, Yahoo is also really just buying time.
"We would expect Microsoft to launch a hostile bid this weekend," Lindsay says. "One way or the other, we'll be working on Saturday."
Photo: Flickr/Creepysleepy
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