Monitors and followers of the US tech industry will notice that Yahoo and Intel’s earnings release have been met with unfavorable stock fluctuations by the general markets. It is amazing how short-term some investors are thinking to sell off their shares based on quarterly earning results that hold little, if any, long-term insight into the corporate strategies of these 2 companies. As of now, Yahoo stocks have plunged by approximately 20% since the results were announced. There is a spillover effect on other tech giants such as Apple and Google (the latter of which has retreated by close to $30) since their record high last week. Nothing has changed fundamentally in terms of strategy or operations over the past fortnight, but expectations level built into the share price of these tech companies, by humans beings, are creating volatility. Irrational exuberance. This caused the meteoric rise of GOOG shares, and should unfavorable news continue, will also be responsible for its fall. There has to come a day when the excitement of random press releases by GOOG announcing their entries into new advertising markets wear off and the financial analysts and seat-of-the-pants investors stop their adolescent fad-based tendencies of buying stocks and finally grow up.
I would buy Yahoo! stocks if I had the money now. I see immense potential in Yahoo’s strategic moves to consoidate their position as the No. 1 trafficked destination site on the Internet. THeir moves to acquire the online communities of Flickr, Upcoming, WebJay, del.icio.us amidst a grander goal of leading the Social Media wave may seem like a haphazard way to consolidate the “Web2.0” industry. Particularly, the chronic hazy and bewildering concept of revenue models of these Web 2.0 startups may have also been looked upon unfavorably by financial analysts with no modicum of understanding of the disruptive wave of media and content creation sweeping across the Internet now. Yahoo’s stock rise is also riding on the coattails of Google. If we assume that Google’s share price is priced reasonably based on the expected boom and crossover from traditional offline advertising to the Internet, then Yahoo is unfairly being cut out from their share of the online advertising profit pie. TIme will tell if Yahoo is successful and I surely am keeping my fingers crossed that Yahoo is right.
Relevant article can be found here.