Yahoo's Yang: We've Got Enough Cash To Make it Through the Downturn

In the second part of his Boom Town's interview, Yahoo CEO Jerry Yang is characteristically vague about the company's potential purchase of AOL and their pending deal with Google – but he is sure that cash on hand puts his company in a strong position relative to other tech firms:

We have no debt. We have a strong cash position. You have to ask what is going to happen to a lot of companies when there is not a lot more money to be gotten. That changes everybody’s perspective, I think.
And we think we can be opportunistic.

We have not bought back stock. Right now our stock is very cheap, but we think having our cash position is more important. We are very focused on scaling, and it is important to be able to be in a financial position to do so if opportunities come up.

With a reported 64 percent drop in third-quarter profits and display advertising flat, Yahoo has yet to prove areas for growth this year. Yahoo is also caught in a revenue trap with its search deal with Google languishing in the Department of Justice. If that deal does not go through, Yahoo will have an an even steeper uphill battle proving that its refusal of Microsoft's buyout bid (at roughly triple what the stock is trading at now) this summer was a good idea.

In this economy, having cash in the bank is a great strength and could help Yahoo ride out tough times. But it's not just enough to wait out the downturn. Yahoo isn't going to raise its stock price if the company stays in survival mode over the next year. The company needs to start showing some earnings potential if it wants to come out on the other side of the economy stronger than when it went in.

See Also:

• DoJ Process Could Sour Google On Yahoo Ad Deal
• Google Learns Ways of Washington the Hard Way
• Google Takes To The Phones Looking For Support In Yahoo Deal