Yahoo: Long on Hope, Short on Details
When Thompson initially announced his plan to reorganize the Internet giant earlier this month, investors became uneasy because it didn't provide any clarity on how to fix the company.
There were some new details offered late on Tuesday, but nothing earth shattering. Thompson did say that Yahoo! is going to cut 50 of its under-performing properties, but did not say which ones. "We don't have to reinvent who we are, but we do need to reinvent our experiences ...we have to move and think like a growth company," Thompson said on the conference call.
Stifel Nicolaus analyst Jordan Rohan derided the lack of detail from Thompson. "In our view, the strategy was too vague and fell into the category of 'easier said than done'," he wrote, in a research note. "We believe the unstated new strategy could be to hang in there long enough to sell the company. We are fine with that," Rohan wrote in his research report. He rates Yahoo! shares "buy," and raised his price target to $21 from $18.
Thompson repeatedly mentioned that Yahoo! is going to use its data to understand its customers better and give them what they want. He also wants to see uniquely relevant content. "So when I visit Yahoo! Sports today, the only thing I actually want to see is Bruins, Celtics and Red Sox. And that's uniquely relevant to me, personalized for me and we ought to be able to do much, much more of that than we've done to this point in time," Thompson said on the call.
The little tidbits of detail on his plan, while better than nothing, probably aren't enough to keep activist investor Dan Loeb of Third Point at bay for long. Loeb, who is Yahoo!'s second largest shareholder, is waging a proxy fight with Yahoo! about putting members onto its board.
Loeb certainly can't be happy that Yahoo!'s search deal with Microsoft(MSFT) isn't living up to expectations, generating way less revenue than Yahoo! anticipated. CFO Tim Morse described the lack of progress on the revenue per search (RPS) agreement with Microsoft as "concerning," but tried to assuage concerns, saying expectations will be met before the agreement runs out. This seems more like the Yahoo! of old than the new Yahoo!
Additionally, the search war has been lost, and lost badly, to Google(GOOG) .
Other investors were not impressed, and given the lack of detail and months of vague talk, who can blame them? Ironfire Capital co-founder and managing director Eric Jackson told TheStreet that he was underwhelmed by Thompson's comments. "I wasn't really impressed," he said, in an interview. "