Would you buy Yahoo stock?

I want to make this link between two things I read today.

  1. Yahoo stock prices makes a rare rise of 2% ++ in mid-day trading after their freefall in July this year.yahoo-finance.JPG
  2. Techcrunch leaks financial snippets of the Yahoo-Facebook non-deal

Yahoo stocks are rising primarily due to the expanded rollout of their latest advertising platform, Panama (Source: Marketwatch). Now, everyone across America can buy ads though their platform, which is a good thing. It surely helps to bolster their bottomline since their last stock dip last quarter was due to their delay in the Panama launch.

But I strongly believe a company’s value lies in its employees, who you employ and how smart they are is really the the bread-and-butter operational core of the company (pardon the pun with peanut butter). For those who understand basic financial statements, two excerpts of the deal analysis made within Yahoo was made available on TechCrunch today. I will summarize some major findings:

  • Yahoo is doing a ten-year financial projection of Facebook’s revenues till 2015.
  • They estimate that by membership growth of Facebook will taper off at 60% of the entire US student population (college and freshmen crowd) by 2010.
  • They project a $1billion revenue for the Facebook business unit under a hypothetical takeover in 2010, and then a $1.6B revenue in 2015.
  • Such projections are based on a 92% active user rate of all Facebook users at any year in these projections. THese active users generate an estimated 900 page views per year.

I think this is ridiculous. Granted that we only see two excerpts of what is probably a thick dossier on the Yahoo-Facebook deal, such projections are still highly ludicrous. Either Mike Arrington’s credibility is at stake here for releasing such half-baked data and passing them off as real financials or the Business Development team in Yahoo oughta be shot.

See the TechCrunch article here and for a better analysis of this Yahoo-Facebook non-deal, check out Fred Stutzman’s article here.


One thought on “Would you buy Yahoo stock?

  1. hey bjorn,

    i purchased yhoo when it was in the $24 range and am holding it out, lately they’ve been bogged down with a number of not-so-great events, but i’m confident that yahoo will break the $30 mid to late 2007 if not sooner.


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