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Why Yahoo! Needs To Fix Advertising Pricing ASAP

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Why Yahoo! Needs To Fix Advertising Pricing ASAP

Yahoo! Inc. (NASDAQ: YHOO) reported disappointing first-quarter results on Tuesday. EPS of the company came at $0.15 on revenues of $1.043 billion versus analysts' estimates of $1.08 and $1.054 billion, respectively.

Scott Kessler from S&P Capital IQ, which has a Hold rating on the stock, was on CNBC Wednesday to discuss Yahoo!'s results.

Uncertainty

"When the company reported results, the stock traded lower" Kessler said, "and then once they started to talk about Yahoo! Japan and strategic alternatives, then the stock seemed to gain some lift.

"Right now, I think, people aren't really sure where Yahoo! is going."

Related Link: 11 Questions For Yahoo! CEO Marissa Mayer

He continued, "That's frankly been a theme for the last couple of years; it's just that back a couple of years ago up until, say, last year it really was about Alibaba. Now people aren't really sure what the emphasis should be on."

Ad Pricing Needs Tweaking

Kessler was asked if Yahoo!'s CEO Marissa Mayer would usher the company into a win in the Internet search space. He replied, "We have a Hold opinion on the stock; we actually took down our 12-month target price to $52 from $57. Really, the thinking is that the operations are still a big question mark. Yes, search was better because of an alliance with Mozilla, which owns Firefox.

"But look at display advertising pricing down double digits for four straight quarters. Yahoo! needs to fix that, we think, for significant appreciation in the stock at this point," Kessler concluded.

 
Image Credit: Public Domain

 

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Posted-In: Alibaba CNBC Firefox Marissa Mayer Mozilla S&P Capital IQAnalyst Color Media

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