Give Yahoo a chance
Posted
Jan 16 2008, 03:18 PM
by
Kim Peterson
Rating:
Wall Street continues to be plenty upset at Yahoo. The stock neared its 52-week low today and its three-month performance (pictured) isn't pretty. I can't find much reason for this week's slide, except for the departure of yet another executive.
The media is piling on Yahoo a bit this week. Kara Swisher at BoomTown writes about a Sanford Bernstein report suggesting that Yahoo drop its conservative business approach and start moving much faster. Outsource the search business, the report said, and cut staff.
The Motley Fool has named Yahoo its worst stock for 2008, noting the slide in Yahoo's share of the U.S. search market recently (Yahoo is around 21% now).
Yes, it's ugly at Yahoo. But I think this might be a great time to buy the stock. First, the lower the stock price gets, the more attractive an acquisition candidate Yahoo becomes. Rumors continue to circulate that Microsoft might buy all or part of Yahoo, or partner in a big way.
Second, you can't overlook Yahoo's base of 475 million dedicated users. Sure, most of them don't pay anything. But that's still a huge number and Yahoo may still find ways to monetize those consumers.
Third, you've got to give new CEO Jerry Yang a chance. Yang, the co-founder of Yahoo, stepped in as CEO last June and is cooking up all kinds of plans and strategies. If he doesn't screw it up, he could set Yahoo back on track. Outsourcing the search business to Google would be a smart move. I think we need to give Yang at least a year before writing off the company.
Disclosure: I don't own shares of any companies mentioned in this post.
