Yahoo Tops Consensus at .11 Per Share

Yahoo (YHOO) reported earnings of about .11 per share after the market closed today, in line with the "whisper numbers" of this morning but handily topping analyst estimates of .09 per share.

Henry Blodget has some real time analysis as the market digests this news, which appears unlikely to have a significant impact on the Microsoft merger deal except perhaps to bump up Microsoft's acquisition offer by a few dollars per share.

As the news rolls in YHOO is only up about $0.10 in after hours trading, indicating that this "good news" may be seen more as "no news" by markets that will likely soon be clamoring for some closure to the Microsoft situation.

Disclosure: Long on YHOO

GOOG Stable After Friday's Price Surge

Despite a small 1% drop this morning, stock in internet giant Google (GOOG) appears to be stable at the new price level of approximately $533 per share, about a 20% increase from the lows of last week. Until Thursday's favorable earnings report Google stock had come under severe downward pressure after reports that revenue could suffer from a major slow down in the increase in paid clicking at Google - by far the internet's most important advertising venue with control of approximately half of all online advertising.

Thursday's earnings, however, indicated that the reports of a Google revenue demise from fewer clicks had been greatly exaggerated. Clearly Google's quality control initiatives have managed to pull more revenue from each click. Click growth is certainly slowing based on Comscore and other large scale reporting, but Google once again has pulled a revenue rabbit out of their magic hat and in doing so has recovered some of the value lost during the stock slide of the past several months.

Google CEO Eric Schmidt has been critical of what he feels was irresponsible reporting by Comscore that led analysts to conclude that Google was in serious trouble. Although Comscore and Google had issued clarification on the implications of the reporting, Google's stock price had suffered severely in Q1 2008, mostly on the basis of how analysts interpreted Comscore's findings of a serious slowdown in paid clicks.

Google Reports Better Than Expected Q1, Stock Soars

Google stock soared in after hours trading to over $500 per share after a very favorable earnings report that suggests Google is doing a much better job of pulling revenue out of paid advertising clicks. After hours GOOG showed a gain of over 11% from today's closing price.

Reuters Reports

Google Earnings Coming Out Today After Market Close

Google Q1 earnings report comes out after today's market close. Many consider this report to be a bellweather for the internet industry at large as well as for Google, given Google's massive dominance in the online advertising space.

A key issue is how well Google monetizes search clicks now that they have implemented new quality controls on advertising. Comscore reports suggest that the growth in total paid clicks is diminishing dramatically from earlier levels (though still up from last quarter), but Google has suggested that they now do a better job of pulling revenue from each paid click. This complex algorithmic balancing act between total clicks and revenue per click will largely determine the fate of Google's stock price after the close today.

CNBC has a short Google earnings preview with some of the key analytical issues associated with today's report.

Disclosure: No position in GOOG

Google Revenue Announcement Coming Thursday After Close

Google watchers are anxiously awaiting the GOOG earnings report due this Thursday. Google shares, trading today at about $477 are off a whopping $270 per share from the 52 week high of $747.

Henry Blodget suggests that Google can show 25% growth but only throug a substantial increase in the price per click, a Google metric that won't be clear until the Thursday report.

This 25% growth estimate obviously assumes that Google has seen a strong increase in price-per-click: If it hasn't, and the Comscore data is accurate, US revenue will miss by a mile and Google's overall revenue will come in well below consensus. Thursday's earnings report will be interesting.

Click revenues are very dynamic making it hard to predict the effect on revenues of the changes at Google which are a funciton of of total paid clicks, which are up but very modestly over last years, and the revenue *per click*, which can vary with season, market, user interface, and other factors. Google has been seeking better quality control for pay per click advertisements which appears to have increased the revenue per click but also was a key factor in the huge decrease in the growth rate of total clicks.

As Bloget notes, Thursday's earnings report will be very interesting.

Disclosure: No position in GOOG

Google To Shareholders: See No Evil

Shareholders in Google will be voting on two controversial provisions about how to govern Google affairs.

The first concerns internet censorship such as that practiced by China and several other countries where much of the online content is monitored, some content is prohibited, and internet archiving is used for political persecution of dissidents.

This proposed set of censorship rules would direct Google to take very aggressive measures to fight censorship. Specifically the vote is whether to implement these policies at Google:

1) Data that can identify individual users should not be hosted in Internet restricting countries, where political speech can be treated as a crime by the legal system.
2) The company will not engage in pro-active censorship.
3) The company will use all legal means to resist demands for censorship. The company will only comply with such demands if required to do so through legally binding procedures.
4) Users will be clearly informed when the company has acceded to legally binding government requests to filter or otherwise censor content that the user is trying to access.
5) Users should be informed about the company’s data retention practices, and the ways in which their data is shared with third parties.
6) The company will document all cases where legally-binding censorship requests have been complied with, and that information will be publicly available

The second proposal would amend the bylaws to establish a Human Rights committee:

The proposed Bylaw would establish a Board Committee on Human Rights which would review and make policy recommendations regarding human rights issues raised by the company’s activities and policies.

Google's proxy outlines each of them in more detail, and Google has recommended a "no" vote on both.

In the case of the internet censorship provisions Google will argue that they would make it more difficult to conduct business in some countries, especially if other players like Yahoo and Microsoft are unbound by such restrictions. However a careful read of the rules above does not suggest that they would seriously interfere with Google's business practices.

Arguably much more outrageous, however, is the decision not to establish a human rights committee at Google. This provision is worded in such as way that it is hard to imagine how it would inhibit Google business or open them to liabilities beyond current levels of exposure.

More importantly, as *the* world's key player in the internet space Google has an obligation to uphold human rights whenever possible and to be extremely proactive in fostering human rights with respect to internet activity.

This is a sad day for Google and the recommendation is a death blow to their now transparently specious "Do No Evil" mantra. Google has an obligation to promote human rights within the reasonable confines of their business structure and goals. In this obligation, they have now dramatically failed.

Yahoo to Microsoft - We Are Worth $40 Per Share

Yahoo initially spurned Microsoftś offer of $31 per share arguing that it was far too little and that a merger was not in the interest of Yahoo shareholders. Jerry Yang, in a letter to shareholders about a month ago, vaguely outlined his vision of a Yahoo that would improve in the coming years. The Yahoo improvement plan has now been articulated in much greater detail along with assumptions about new revenue coming from advertising and expansion of Yahoo properties. Lots of new revenue claims Yahoo. Leading tech market watcher Henry Blodget provides an excellent financial breakdown here. Henry is skeptical of the assumptions but agrees that if they are accurate then Yahoo is indeed worth $40-50 per share.

I see this move as something of a Hail Mary pass to stave off a merger, with the added bonus of trying to justify another few dollars increase on the bid from Microsoft before what now appears to be a very likely takeover of Yahoo. Shareholder discontent is high enough that Microsoft need not do much to win a proxy fight with the existing Yahoo board.

Disclosure: Long on YHOO

News Corp: "Not going to get into a fight with Microsoft" over Yahoo

Yahoo's chances of eluding a Microsoft aquisition dimmed today after comments by Rupert Murdock, chief of News Corp who said:

We're not going to get into a fight with Microsoft, which has a lot more money than us,"

Yahoo has been working very hard to avoid a Microsoft takeover, with CEO Jerry Yang stating in a recent letter to shareholders that Yahoo feels the Microsoft offer substantially undervalues Yahoo. However many market watchers see the takeover as very likely, either by eventual capitulation of the current Yahoo board or by their replacement in a proxy battle that Microsoft seems likely to win.

Today's statement from News Corp is another nail in the CEO coffin that Microsoft appears to be building for Yang and at least some of the current Yahoo board members.

Disclosure: Long on Yahoo