The Coming Internet Earnings Trifecta (YHOO, AMZN, GOOG)

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If you thought this week was a rough or busy week in earnings season, you have not seen anything yet.  Next week we literally will have around 150 companies or more post earnings on Tuesday, Wednesday, and Thursday.  But we also have three of the Internet Monsters reporting earnings: Yahoo! (NASDAQ: YHOO) on Tuesday; Amazon.com (NASDAQ: AMZN) on Wednesday, and Google (NASDAQ: GOOG) on Thursday. 

We have combined a pre-cheat-sheet here for traders with summary estimates from First Call, comments about the analyst targets and recent commentary from that lot, and we noted recent chart activities with recent key levels that traders will want to pay attention to.  We’ve also added in some conjecture on our own as far as other issues we are looking at on each one.  Because of a long time for the options expiration and because of the options volatility we won’t make any options trader expectation assumptions until the same day as earnings for each stock.  The full previews are as follows:

On Tuesday (JAN-29) we will see earnings out of Yahoo! (NASDAQ: YHOO).Jerry Yang, Chief Yahoo!, will give us another earnings report and forYahoo! shareholders’ sake, we hope Mr. Yang sounds a little moreaggressive in his conference call.  Interestingly enough, we justfeatured this under "companies that might not be around" after 2008 andit has been under constant review for a more detailed piece in ourSpecial Situation Investing Newsletter as a potential takeover target.It is still listed as the number one Internet property, although thislead has been dwindling in 2005, 2006, and 2007. We have also noted howtraders are using comparisons of its hidden value in Yahoo! Japan andin Alibaba being worth a large portion of its $28+ Billion market cap.Keep in mind that these revenue numbers are on an ex-TAC (trafficacquisition costs) basis after what it pays out to its partner sites:

  • YHOO Q4-07 $0.11 EPS & $1.41 Billion Revenues;
  • YHOO Q1-08 $0.11 EPS & $1.37 Billion Revenues;
  • YHOO FY-08 $0.53 EPS & $5.92 Billion Revenues.
  • 52-WEEK TRADING RANGE: $18.72 to $34.08
  • ANALYSTS AVG. TARGET & COMMENTS: $32, although many targets may be unofficially lower now.
  • CHART COMMENTARY: Yahoo!’s chart actually held up a tad betterthan most Internet stocks in early January, but it took the marketpummel along with the others after the first week or so.  Its 50-daymoving average is $24.16 and its 200-day moving average is higher at$26.27, indicative that this one has been weaker far more of late thanits peers.  This one just this week traded briefly under $19, so it hasseen a solid recovery.

On Wednesday (JAN-30) we will see earnings out of Internet retailmonster Amazon.com (NASDAQ: AMZN), perhaps followed up with a mediatour with the famed Bezos laugh. Amazon.com has essentially startedselling everything under the sun and its clearinghouse andorder-taker-only status on most merchandise has been a huge success.We’ve also got its new eBook reader, although we’d caution that this isstill and will continue to be a small portion of its business.  Themajor upside last year after Q1 2007 earnings and then again in Q2created two waves of short covering that have been hard to compare andshares have only recently backed off enough where traders will startusing multiples of earnings and sales for a normal comparison.  We’llbe most curious to see if the slow down in physical retail has startedto bleed over into online retail, particularly since Amazon.com stillmanaged to grow in its offerings and in its number of users when theeconomy was slowing last time around. Here are the stats:

  • AMZN Q4-07 $0.48 EPS & $5.38 Billion Revenues;
  • AMZN Q1-08 $0.00 EPS & $3.95 Billion Revenues;
  • AMZN FY-08 $1.63 EPS & $18.27 Billion Revenues.
  • 52-WEEK TRADING RANGE: $36.30 to $101.09
  • ANALYSTS AVG. TARGET & COMMENTS: $100
  • CHART COMMENTARY: Amazon.com actually peaked out last summer andas far as smoothing things out we’d really count the highs in themid-$90’s because of three waves of resistance there; most recently atthe start of the year. last year the high-$60s to $70 handle became thede facto floor and this was almost challenged when things were lookingvery bad over the last week.  The 200-day moving average is $78.25 andthe 50-day moving average is $86.47, and shares have been hanging outmost of this week right under that 200-day moving average.

On Thursday (JAN-31) we will see earnings out of Google (NASDAQ: GOOG),Wall Streets most loved Internet property.  Google is becoming a muchlarger player than merely being the King of Search with its entranceinto YouTube, DoubleClick, Alternative Energy hopes, Google Apps,Hosting, Google base, payment processing, Open Handset Alliance andmore.  One thing that will be key to watch is the upcoming wirelessspectrum auction that the company may spend billions of dollars on.Traders also usually try to make a tie in on the number of employeesand new hires that come in each quarter as a measurement of how muchcash it is spends at the expense of earnings.  While Yahoo! actuallystands to lose the most on the Internet side, the street really triesto use Microsoft as its ultimate benchmark.  Interestingly enough wehave also heard that some key funds have greatly lightened up or evenmostly liquidated their positions over the last week or so as fundredemptions came in, and some of the fund names thrown around in thisrumor mill were Fidelity and  CRM (two largest holders).  Keep in mindthat these revenue numbers are on an ex-TAC (traffic acquisition costs)basis after what it pays out to its partner sites:

  • GOOG Q4-07 $4.43 EPS & $3.44 Billion Revenues;
  • GOOG Q1-08 $4.87 EPS & $3.78 Billion Revenues;
  • GOOG FY-08 $20.76 EPS & $16.5+ Billion Revenues.
  • 52-WEEK TRADING RANGE: $437.00 to $747.24
  • ANALYSTS AVG. TARGET & COMMENTS: $765+, although that figuremay be old in light of some commentary that has come out this week. 
  • CHART COMMENTARY: Google’s chart has not at all been immune fromthe market woes and this one closed out 2007 right around $700.  Shareshit a low of $519.00 just on this Wednesday and have hovered around$575.00 on Friday.  Google’s 200-day moving average is $569.69 and its50-day moving average is $662.89, so it also had a violation of thoserecently.

Stay tuned next week because many analysts make last minute adjustmentsto their earnings and revenue estimates, so these First Call numbersmay change by the time they report.  Happy trading.

Jon C. Ogg
January 25, 2008