Monday, January 28, 2013

Yahoo Tops Analysts’ Estimates on Search, Ad-Price Increases

Yahoo! Inc., the biggest U.S. Web portal, reported fourth-quarter profit and revenue that topped analysts’ estimates, benefiting from buoyant demand for online search and an increase in prices charged for advertisements.
Marissa Mayer, chief executive officer of Yahoo! Inc., during the World Economic Forum (WEF) in Davos, Switzerland, on Jan. 25, 2013. Photographer: Jason Alden/Bloomberg
Jan. 28 (Bloomberg) -- Yahoo! reported profit and sales that topped analysts’ estimates as Chief Executive Officer Marissa Mayer benefited from an increase in the prices charged for advertisements. Jon Erlichman reports on Bloomberg Television's "Street Smart." (Source: Bloomberg)
Jan. 28 (Bloomberg) -- Eric Jackson, president of Ironfire Capital, talks about Yahoo! Inc.'s fourth-quarter earnings, the leadership of Chief Executive Officer Marissa Mayer, and the company's acquisition strategy. Jackson, speaking with Adam Johnson and Trish Regan on Bloomberg Television's "Street Smart," also discusses Research In Motion Ltd. and Apple Inc. (Source: Bloomberg)
Jan. 28 (Bloomberg) -- Brian Wieser, an analyst at Pivotal Research Group, talks about Yahoo! Inc.'s fourth-quarter results and business strategy. He speaks with Emily Chang on Bloomberg Television's "Bloomberg West." (Source: Bloomberg)
Fourth-quarter earnings, excluding some items, were 32 cents a share, Sunnyvale, California-based Yahoo said today in a statement. Sales, excluding revenue passed to partner sites, increased 4 percent $1.22 billion. Analysts on average hadprojected profit of 28 cents on revenue of $1.21 billion, according to data compiled by Bloomberg.
Chief Executive Officer Marissa Mayer recorded the first annual sales increase in four years in 2012 after collecting more for ads placed on the company’s pages and boosting revenue from search-related marketing messages. Forecasts for this quarter and full year fell short of analysts’ predictions, underscoring the challenge Yahoo faces in display advertising, an area where it lags behind Google Inc. and Facebook Inc.
“They underperformed significantly versus our expectations on display and overperformed on search,” said Brian Wieser, an analyst at Pivotal Research Group in Portland, Oregon, who has a hold rating on Yahoo.
Yahoo stock rose in late trading, after the results were released. It had fallen less than 1 percent to $20.31 at the close in New York, and they’ve climbed 2.1 percent this year.

Forecast Shortfall

First-quarter revenue excluding the portion passed to partners will be $1.07 billion to $1.10 billion, shy of the $1.12 billionprojected by analysts. Sales on that basis for 2013 will be $4.5 billion to $4.6 billion, compared with analysts’ $4.59 billion estimate.
Net income attributable to Yahoo fell 7.9 percent to $272.3 million, or 23 cents a share, Yahoo said.
Sales of display ads fell 3 percent to $591 million. The company is working to improve in display, a market that EMarketer Inc. predicts will increase to $17.7 billion this year, by investing more in tools that deliver ad promotions to consumers based on their browsing history, said Kevin Stadtler, president of Stadtler Capital Management LLC.
“They are really well positioned because they can provide real-time data to advertisers, who can then pinpoint ads to people who are interested in their products,” Stadtler, who manages $7.2 million in assets, including Yahoo shares, said in an interview. “That’s a really big deal.”

Watchdog Says U.S. Treasury Failed to Curb AIG, GM Pay

The U.S. Treasury Department “failed to rein in excessive pay” at bailed-out American International Group Inc. (AIG)General Motors Co. (GM) and Ally Financial Inc. (ALLY), the rescue program’s inspector general said.
Sixteen of the 69 top employees at the three companies had 2012 pay packages worth at least $5 million and all but one had total compensation of $1 million or more, the Special Inspector General for the Troubled Asset Relief Program said in a report today. Since much of the pay is in stock, only three of the executives had cash salaries of more than $1 million.
American International Group Inc. Chief Executive Officer Robert Benmosche, 68, received less than some peers in 2011. He got about $14 million in total compensation, including a $3 million salary and $10.9 million in stock awards, according to a regulatory filing. Photographer: SeongJoon Cho/Bloomberg
Despite previous warnings by the special inspector general that the Treasury “lacked robust criteria, policies and procedures” to curb excessive pay, the department “made no meaningful reform to its processes,” according to the watchdog known by the acronym SIGTARP. “SIGTARP found that once again, in 2012, Treasury failed to rein in excessive pay.”
Christy Romero, the special inspector general, said AIG, GM and Ally “convinced Treasury to roll back its guidelines by approving multimillion-dollar pay packages, high cash salaries, huge pay raises, and removing compensation tied to meeting performance metrics.”

Taxpayers’ Interests

“Treasury cannot look out for taxpayers’ interests if it continues to rely to a great extent on the pay proposed by companies that have historically pushed back on pay limits,” she said in an e-mailed statement.
Patricia Geoghegan, the Treasury’s acting special master for TARP executive compensation, said she disagreed with the special inspector general’s findings.
The Treasury “has limited excessive compensation while at the same time keeping compensation at levels that enable” the three companies to remain competitive and repay their bailout money, Geoghegan said in a Jan. 25 letter to Romero.
She said a draft of the SIGTARP report was “inaccurate in numerous ways” and Treasury’s comments and objections were largely ignored.
Pay for top executives at seven bailed-out companies was scrutinized and restricted by the Treasury special master’s office starting in 2009. AIG, Bank of America Corp., Citigroup Inc., Chrysler Group LLC and Chrysler Financial Corp. have left TARP and are no longer subject to the special master’s rulings.

Boeing Risks $5 Billion in Revenue on 787 Probe’s Outcome

As government regulators investigate Boeing Co.’s (BA) 787 Dreamliner and company engineers search for solutions, investors and analysts are grappling with the bottom- line question: How much will the plane’s grounding cost?
Jan. 28 (Bloomberg) -- Lawrence Haverty, a portfolio manager at Gamco Investors Inc., talks about the outlook for Boeing Co., the U.S. bond market and Apple Inc. Haverty speaks with Tom Keene, Sara Eisen and Scarlet Fu on Bloomberg Television's "Surveillance." (Source: Bloomberg)
Jan. 24 (Bloomberg) -- U.S. National Transportation Safety Board Chairman Deborah Hersman speaks about the NTSB's investigation of two battery-related fires on Boeing Co.'s 787 Dreamliner. Hersman, speaking at a news conference in Washington, says the Dreamliner's design should have prevented the incidents that prompted regulators to ground the plane earlier this month. (This report is an excerpt. Source: Bloomberg)
The answer depends on what probes in the U.S. and Japanuncover, with scenarios ranging from a quick resolution if a few defective parts have to be swapped out to a drawn-out inquiry that requires a fundamental redesign. The worst case scenario: The Dreamliner’s problems run so deep that Chief Executive Officer Jim McNerney has to write off about $5 billion in anticipated revenue, said Howard Rubel, a Jefferies & Co. analyst who puts the odds of that at about 4 percent.
The costs are likely to be much less, in the hundreds of millions of dollars, say investors and analysts, including New York-based Rubel. That would let Boeing, which reports 2012earnings on Jan. 30, reap the rewards of what he estimates was a $25 billion investment in the plane, clearing the way for a profit surge and more money for investors.
“As far as dividend growth, cash flow and share buybacks, I think that’s still intact,” said Gary Bradshaw, a fund manager at Hodges Capital Management in Dallas, who added to his Boeing stake after a fire broke out on a Dreamliner on Jan. 7.
U.S. investigators are still searching for what caused the fire in the lithium-ion batteries on a Japan Airlines Co. 787 in Bostonthat day as well as a fault that forced an All Nippon Airways Co. plane to make an emergency landing in Japan on Jan. 16. The jet debuted commercially in 2011, and 50 have been delivered so far.

FAA Probe

The grounding will most likely cost Boeing $550 million, Rubel wrote in a report with a range of potential expenses, from $125 million to reimburse carriers that lease replacement jets to the $5 billion write-off. Doug Harned, a Sanford C. Bernstein & Co. analyst in New York, estimated Boeing’s expense at less than $350 million.
With probes still under way by the U.S. Federal Aviation Administration and the National Transportation Safety Board, McNerney will face questions on this week’s earnings call that he won’t be able to answer. Chicago-based Boeing is due to give its 2013 financial forecast and delivery plans.
“We are working this issue tirelessly,” Chaz Bickers, a spokesman, said of the 787. “At the same time, we are keeping our other teams keenly focused on their own program performance and customer commitments.”


  1. I'm not sure about the appliances, but the credit card companies charge the merchant a fee of 3-4% when customers use their plastic. And they prohibit the merchant from telling you about the fee.

    So the most competitive merchants here (computer stores) get around that ban by advertising their low prices as "all prices are cash discounted", and if you don't pay with ca$h/debit card, they add the 3-4% fee on top of the advertised price.

    Almost every time I go there, an eye-rolling clerk is explaining to some thick headed customer that if they pay ca$h they pay the advertised price, otherwise it is more. Duh.

  2. Please read the report I linked to yesterday:

    It covers many of the topics we discuss here daily, and is extremely insightful. Very thought provoking, and well worth the time.

  3. Gaw-I would LOVE to get a 'discount' for cash. LOVE it. About the only one I can find here is that you sometimes get one for gasoline.

    I think all of us here have learned to barter, use flea markets, yard sales, etc. as a means to stretch our interests...whether they be for the environment or simply our pocketbooks.

  4. Just as the spam has increased, so am I seeing other signs of the times. Yesterday, I called the dentist as I am feeling a 'twinge' and I've learned twinges are to be listened to before they get to 3am PAIN. I called and managed to get 2...yes, TWO appointments TODAY for my husband and I to get our teeth cleaned. That is unheard of! Then this morning I get a call from the eye doctor. I have an appt. in February. They had a cancellation and would I like to come in today?

    To me this spells that these professionals are lacking maintenance appointments. People are only going when they HAVE to and push back regular cleanings, etc.

    As we have no insurance, we will have to pay cash for our appointments. And my daughter who works at a vet has seen her boss's business fall quite a bit. Again, if an animal is SICK they call. Or if they HAVE to have a rabies vaccination. But regular check-ups...those are drying up.

    Just a personal observation.

  5. Thanks GAW I will look at the link. CL I think you are double clicking when you hit the :publish your comment." That is why the double clicks. I am cutting back in vet bills and dental issues when I can. My auto mechanic will discount me if I pay cash. That is about all I have seen.

  6. GAW good read, but it is a long read for you others. I am a fast readerbut that was about 80+ pages in .pdf.

  7. Basically the article speaks of the creation of bubble and the mess we are in now. How "Globalization" has been a total failure and that we are quickly running up the cost of energy returned for energy invested. By then it is pretty much game over. We cannot continue to blow bubbles by printing and lowering interest rates.

  8. Yeah, I forget how fast I read, so it does not occur to me that others would find it a long bit of effort.

    That report IS excellent, probably one of the best I have read. Nothing we have not discussed here, but he ties it all together very well.

    He forecasts 50% higher food prices in 8-10 years, which certainly sounds plausible. For richer nations, it means less disposable income to be spent on everything but food and energy. For poorer nations, it likely means starvation.