Sunday, June 27, 2010

Bartz Focusing on Yahoo! Share Price (YHOO, GOOG, MSFT)

Yahoo Inc. (NASDAQ: YHOO) had its annual meeting of shareholders today.  The still relatively new CEO Carol Bartz says she wants to improve the company’s margins to build shareholder value.  She has also addressed the Google Inc. (NASDAQ: GOOG) rivalry and the partnership with Microsoft Corporation, but there really seems to be this nagging issue and focus on Yahoo!’s lagging share price.
Bartz noted today that the work with Microsoft on its search partnership is continuing.  The company is letting Microsoft lead in the effort.  In short, she is going to let Google and Microsoft fight over data center dominance as the combined Yahoo-Microsoft search is now roughly 30% of the U.S. online search market.  That figure has been lower as some recent Hitwise data showed May’s search as being 72.17% controlled by Google, 14.96% controlled by Yahoo!, and 9.43% under Microsoft’s Bing.
Bartz seems to have this keen focus on share prices, something she can’t afford to ignore as CEO.  Bartz noted that she wants to add to shareholder value by better managing Yahoo’s Asian investments.
As far as that nagging she price, she said $14, $15, and $16 is just too low.  Few will disagree here considering that the reason Bartz is CEO is because the former Chief-Goof Jerry Yang turned down about $30 per share as a buyout.  Shares just closed down 2.6% at $14.83 today, and the 52-week range is $13.97 to $19.12.  The current market cap is $20.5 billion and Thomson Reuters has an average analyst target of $19.43 a year out.
Bartz even went as far as calling Yahoo! something which has become almost a commodity.  Bartz has also gone through downsizing efforts and even furloughing during dead times.  She wants the company’s operating margins to grow from very levels today up to above 20%.
It will be interesting to see how much Yahoo! can or would want to capitalize on its vast Asian investments already on the books.  Yahoo! owns almost 40% of Alibaba, or so our latest count shows.  Then there is Yahoo! Japan, with about a 34% stake per our most recent data.  The value of these assets has been said to be north of $10 billion by some, and the tax considerations are a wild card.
Focusing on share prices alone can be a tricky job, even if it is implied as a public CEO directive.  Most corporations claim that they are focusing on long-term growth or long-term shareholder value and they expect the markets to eventually reflect the value.  Bartz is targeting the stock here.

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