Intelligent Speculator

As you know, I do trades mainly in the technology field and I do have a screen that helps me follow the action for 20-25 companies that I trade on. Over the past few years, Yahoo has been one of the more interesting names to trade for a few reasons:

-It is in the very dynamic search industry

-It competes with tech companies such as Google, Microsoft and IAC Interactive.

-It is fairly easy to get indications of market share for Yahoo as well as get a good idea what kind of revenues the company is pulling in

-There was also a lot of speculation about the stock and the discussions Microsoft had to buy the company. As well, Yahoo has always been a content company. While search has been its main focus, it still generates a decent amount of traffic through all of its content properties.

But since Yahoo did its search deal with Microsoft, I simply have been unable to get a clear view on the company. It is unclear to me what Yahoo’s core now represents. It would not be search as it has basically given up on that in order to help Microsoft’s Bing. But is Yahoo’s profitability now linked so much to Microsoft that I should consider Bing’s recent signs of success over Google as a positive for Yahoo? I doubt it strongly. In my opinion, Microsoft is the major winner here, not Yahoo!.

So Yahoo has been refocusing and most of what we’ve heard has been centered on cost cutting. That is great and will certainly help profits in the short term, but how much costs can Yahoo cut? And in a technology company, I would expect profits to be driven by rising revenues, not dropping costs.

Many of Yahoo’s properties are not showing growth. While it used to be the leader in finances, dating, email, sports, it is no longer in all of these categories. It just seems as though Yahoo was involved in so many areas that it stopped improving its page or at least did not do so at the speed of its competitors. Because of that, Yahoo has been losing ground in almost all of its markets/properties.