What To Expect From Yahoo! Earnings (YHOO, GOOG, MSFT)

Yahoo! Inc. (NASDAQ: YHOO) is due with earnings after the close.  For starters, remember that Yahoo! and Google both have to be counted as ex-TAC revenues that backs out the traffic acquisition costs from the revenues.  Thomson Reuters has estimates at $0.16 EPS and $1.06 billion in revenue.  Thomson Reuters has next quarter estimates are $0.17 EPS and $1.10 billion in ex-TAC revenue.

Yahoo! continues to fight a valuation trap, although not a value trap.  Google Inc. (NASDAQ: GOOG) trades at a cheap earnings multiple and has grown faster at Google’s expense.  Microsoft Corporation (NASDAQ: MSFT) has been growing Bing in search and we’ll likely find out more about how the Microsoft-Yahoo! partnership is coming when the software giant posts results.

While its stock is stuck, investors want to know if the company will really unlock its international asset value.  The quake in Japan probably postponed any sale of Yahoo! Japan  and it will probably keep its holdings in Alibaba as well.

Analysts have an average price target of $18.55 on the stock versus the $16.25 share price today.  Options traders appear to only be braced for a move of just over $0.50 per share, or a move of up to 3% in either direction.

The chart here may offer more insight than a Japan quake, asset sales, and what is happening at competitors.  The StockCharts.com chart shows what has been a very range-bound chart.  The stock is waiting for something… At $16.25, its 50-day moving average is $16.74 and its 200-day moving average is $15.70.  It is funny, but these key moving averages may be what the options traders are keying off of as well.

As far as the search saving being moved to 18 months from 3 months, this is something more social than it is anything.  The public might not even know or care.  The bias has also softened now that Google was so soft after earnings.  The theory seems to be “If things are tough at Google, they likely are at Yahoo! too.”  The difference here is that Yahoo! is not out hiring every single person it can and Yahoo! is also not throwing money into wind farms and other areas not tied to the web.

At $16.25 in early afternoon trading, Yahoo!’s 52-week trading range is $12.94 to $18.53.

JON C. OGG