‘Yahoo may be sold’
The chance Yahoo! Inc will put itself up for sale has increased after the most-visited United States Web site lowered its revenue forecast, according to the Stanford Group.
Microsoft Corp is a candidate to buy the company, analyst, Clayton Moran, said.
“Given a seemingly increasing disconnect between management commentary and operating results, a sale of Yahoo seems more likely,” Moran wrote in a note to clients.
“In the near-term, we believe this stock will linger in the mid-$20s, unless a suitor arises.”
Shares of Yahoo fell to the lowest price of 2007, losing $1.35 to $26.18 in the Nasdaq Stock Market composite trading.
Their 4.9 per cent drop was the most since April. They have slipped 19 per cent in the past year, compared with a 38 per cent gain in Standard & Poor’s 500 Information Technology Index.
Yahoo is facing tougher competition as Google Inc extended its lead in Internet search queries and new rivals took sales in display advertising, the company said when it reported second- quarter results after US markets closed on Tuesday.
The company forecast revenue for the rest of the year that trailed most analysts’ estimates.
Yahoo has “dramatically underperformed” Google, which has gained market share in Internet searches and increased its technological edge, Boca Raton, Moran wrote.
Yahoo is also losing advertising to News Corp’s MySpace and Google’s YouTube, he wrote. Yahoo brought in co-founder, Jerry Yang, as chief executive officer last month to help close the gap with Google.
Yahoo’s diminishing share of the search market has contributed to six straight quarters of declining profit and the slowest sales growth since 2001.
Moran reduced his share-price estimate for Yahoo by 6.3 per cent to $30.
The analyst also cut his 2007 profit estimate by 8.7 percent to 42 cents a share and his 2008 forecast by 25 per cent to 56 cents.
He maintained his “hold” rating on the stock.
Credit Suisse, UBS AG, Sanford C. Bernstein & Co and Piper Jaffray & Co were among other brokerages that cut their share- price estimates for Yahoo.
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