We earlier reported Yahoo! Inc. (NASDAQ:YHOO) earnings, which were just released. The results came in better than most analysts expected. Shares are up $2.8% as of the time of the initial writing. The call is scheduled for 5PM eastern standard time.
We are paying close attention because Dan Loeb, CEO of Third Point, is currently launching a proxy war against the company. He is demanding changes on the board of Yahoo, and a seat for himself. We expect that Third Point will want a lot more than one good quarter. As value investors, they are focused on the long term strategy of the company.
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Loeb submitted eighteen questions this morning to Yahoo, and we expect some questions to be brought up on the call. We will be focusing especially on the questions and answers for that reason.
We will be updating information live, so keep checking back for more.
(Disclosure: The author of this post has no position in the company nor any intention to initiate one within the next 72 hours.)
4:56PM: Yahoo has a 27 page presentation up on its website, supposed to accompany the conference call.
5:02 PM: IR spokesman says call will last 30 minutes, followed by Q&A
5:05PM: CEO, Scott Thompson says that he has a lot to say and plans to talk about future changes. He is pleased with revenue and lower costs. Search was higher, Q1 gains mostly due to changes that Yahoo made. Microsoft Corporation (NASDAQ:MSFT), still is not delivering expected results.
5:06PM: Stresses the need to monetize existing visitors to the site, which number hundreds of millions of people.
5:08PM: click through rates are increasing, but Microsoft alliance is not achieving the results the company is looking for.
5:11PM: Q2 guidance is unclear, and the company is giving wider EPS guidance. Revenue is expected $1.3B low end.
5:13PM: Company will provide cost guidance through the upcoming transition period. 1. on-going costs 2. transition costs- those should be zero by mid 2013 3. costs for asset write downs, and other costs.
5:15PM: Q2 ex tax cost guidance should be $875-$985million. This includes marketing costs, and transition costs should be $40-$50 million. This is related to employees who will be retrained by company.
5:17PM: Ultimate goal is to grow revenue above market rate, which will require diversifying revenue, such as new commerce unit.
5:18PM: As business model evolves, company will provide more updates.
5:19PM: CEO back on line; he says the foundation is still valuable with 700 million visitors, and lots of partnerships. The content matters to millions of visitors.
5:20PM: However, losing share of engagement and revenue. One of his first actions was to refine focus for users and advertisers.
5:21PM: Yahoo’s CEO realized the distribution network was a strong asset. However, the position is not sustainable.
5:23PM: Yahoo focused on diligent review. Restructuring recently announced are ‘just the first step.’
5:24PM: Focusing on R&D on existing platform and stopping spending on new projects and businesses outside the core business.
5:27PM: Yahoo’s CEO thinks that there were way too many employees. He thinks that plans are fully aligned for perfect financial model of company. This will lead to higher margins.
5:29PM: Exploring opportunities to monetize Yahoo! Japan and Alibaba, however the valuation needs to be right for shareholders. Company is not in a position to provide further details.
5:31PM: Question and answer question is starting now:
Q 5:32PM: RBC capital markets: Any new strategies? AOL-Microsoft agreement shows potential?
A 5:33PM: Plan to use data, advertisers and more to connect what users are looking for with what advertisers are looking to sell to them. The details will come out shortly.
Q from UBS analyst 5:35PM: How is sales-force doing? RPS gap?
A 5:37PM: Sales are doing well, but company plans to improve front page and data sold there, which was flat, and an accomplishment. Company notes display revenue is displaying growth.
Microsoft is not making enough progress on RPS, but company is working on improving it.
5:39PM: Search is very important. Yahoo is investing time to make sure the relationship continues to go well.
5:39PM Q from Citigroup analyst: Analyst asks about mobile:
5:40PM A: The company plans to refine it. Top line metrics are interesting but do not measure engagement. Company has top people working on mobile devices.
5:41PM Q from Credit Suisse Analyst: RightMedia initiative how does it play into strategy? Why did buyback slow down?
5:42PM Q from Barclays: Earnings from ops seemed low? Click revenue? Possible dividend?
5:44PM A: Yahoo reports in arrears, Alibaba had great quarter, but there is a lag. Yahoo Japan had impairment last year, which was missing this year.
Click revenue should be continue to ramp, investments will go along with it. Q1 was low point of click increments.
Will focus on buybacks over dividends but cannot provide details.
5:46PM Q from JP Morgan analyst: Asked about Microsoft agreement?
5:46Pm A: Not much has changed.
5:49PM A: Will the company do any acquisitions? if you monetize Alibaba will cash be returned to shareholders? Share is declining?
5:51PM: Yahoo will not use M&A unless it is absolutely necessary. The near term focus is core.
Yahoo cannot share more information on Alibaba. However the company has a ‘high priority’ to return capital to shareholders.
Growth is more important than share. Microsoft alliance must be focus. It is difficult to estimate RPS control.
5:55PM question from DB analyst: Can you increase RPS volume?
5:56PM A: Volumes were flat, and revenue growth of 8% was all growth in CTR, so RPS was the bulk of it.
Company is doing well in display, there are secular declines. However the company still was able to have a decent rate.
Call is over.
ValueWalk quick comment: Company was extremely vague on everything, and blamed everything wrong on Microsoft.