Yahoo (Nasdaq:YHOO) shares have done well for the past year mainly because of faith in the new CEO Marissa Mayer. But revenues have fallen and some investors are worrying. Tech stocks are not used to rebuilds and restructure and perhaps this is a good time to think about a process old line industrial stocks have followed for years.
Firstly restructures do not happen over night. It takes a long time to hire the correct staff get them focused and start producing commercial results.
Secondly a lot of existing revenue sources are declining and are or will be abandoned shortly. Temporarily this will cause short-term dips.
Thirdly the real catalysts for driving shareholder wealth will come from my products and new applications. Watch this space like a hawk. This is what will determine Yahoo’s success. Getting into a fist fight with Google or Facebook only results in a war of attrition with declining profit margins. Much like reading a history of World War One. Much bloodshed little progress. World War Two you had tanks, aircraft and new thinking on both sides.
Lastly watch the acquisitions space. Yahoo knows they have to buy and buy quickly.
So a classic financial analysis of quarterly earnings will profit little. So for those of you who like to analyze the crap out of everything don’t bother. The winning cards have not yet been dealt.
George Gutowski writes from a caveat emptor perspective.