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Is Yahoo Being Undervalued by Wall Street?

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Despite Yahoo's decline in the search market as of late, some are beginning to cry foul, saying Wall Street is punishing YHOO just a little too much. Prices dipped below $11 a share this week, almost half the value when Microsoft made its acquisition offer for $31 per share.

A couple of points in defense of Yahoo:

  1. Its decline in search market share is slight. They're still #2. They're comparable to the Apple of the search world if you're just looking at the numbers.
  2. The stock is being brought down by the greater market. Even Google's stock is down to the mid-300s, despite beginning the year in the high 500s. But Google posted an increase in revenue and beat the pessimistic Street yesterday. Their stock is on the rise at this hour, while the Dow Jones is on the decline again.
  3. They have a bunch of strong properties, including Yahoo Sports, which had a stellar August thanks to the Olympics. They're also number 1 in email.

A couple of points in defense of Wall Street:

  1. Jerry Yang is no Steve Jobs (or at least not anymore).
  2. The search advertising partnership with Google has been delayed while they attempt to work things out with a wary DOJ.
  3. The economy has everyone holding their wallets tight.

Jerry Yang and the gang need to refocus on the customer instead of executive bonuses, while Wall Street needs to understand that while advertising in general may decline, search advertising is an attractive option for advertisers looking to maximize budgets.

Oh, and in case you're wondering, Microsoft remains a scorned lover.


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