The business stories that matter, by Fortune's Colin Barr

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January 30, 2008, 7:01 am

Will Yahoo bounce back?

How low can Yahoo (YHOO) go? The Internet giant disappointed Wall Street for the umpteenth time with Tuesday afternoon’s softer-than-expected 2008 forecast, sending shares sliding 11% to within a dollar of their 52-week low. Yahoo pledged to cut 1,000 jobs and boost its investment in services users want, but analysts are wondering how the company’s display advertising business will hold up in a recession. Yahoo’s latest poor performance comes amid a selling spree in the tech sector, where Apple (AAPL) has lost a third of its value this month and Intel (INTC) has dropped 23%. Even Google, which is due to post its fourth-quarter numbers after the close Thursday, is down 20%. So will the wave of selling sweep Yahoo even lower? A drop Wednesday looks like a good bet, but analyst Clay Moran of Stanford Group justifies his hold rating by telling Bloomberg television that at Tuesday’s postclose lows, Yahoo stock is trading at nine times its 2008 cash flow estimates - toward the low end of the media industry’s average multiple of eight to 12 times cash flow. Maybe, with the help of a Fed interest rate cut this afternoon, Yahoo shares will catch a bid again.

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I hope Yahoo! gets the credit it deserves and get the confidence from the market back.
Many of the innovations we see over the web have been developed by the Yahoo! folks.
Their products have quality and usually are pioneers (Yahoo! Mail, Yahoo! Finance, etc). Unfortunately, Google, due to better image build-up and some great tools such as Google Earth, is today the hit of the moment.

Posted By Guilherme Loretti, Sao Paulo : January 31, 2008 6:47 am

Think again, YHOO is a company with no growth, overshadowed by GOOG’s dominance in search, tarnished reputation by sending Chinese dissidents to dictator, internal turmoil, and gross over-valuation.

Posted By Matt, Chicago, IL : January 30, 2008 10:33 am

Yahoo is a company worth over $26 billion Cap, sales over $6 billion, next to no debt and currently holding over $2 billion in cash. They are taking steps to improve for capturing a bigger stake in the future but at its current price its a steal and one of the best buys on Wall Street.

Posted By Ted, Santa Ana, Ca : January 30, 2008 10:09 am

Never listen to this guy, who obviously did not know what the hell is going on. He posted numerous negative comments about ETFC when ETFC was trading at $2.5. Look at what happened at ETFC! This guy is a jerk!

Posted By George, West Hampton, NY : January 30, 2008 9:53 am

YHOO is a dog. The only chance they have is to be bought out. That’s it. Game, set, match for this company.

apple is the Best Growth story in the market right now!!!!

Posted By dave, houston : January 30, 2008 7:08 am

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Colin Barr covers business and finance for Fortune.com. Previously he was an editor at TheStreet.com and author of the weekly Five Dumbest Things on Wall Street column, and an editor at Dow Jones Newswires.

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