Jeffrey Lindsay, an analyst at Sanford C. Bernstein, thinks that Yahoo! would be worth a lot more if they either broke apart their online businesses or conducted a facelift, which might even include turning its back on its search engine mainstay.
However, Lindsay does not think that Yahoo! would actually take either course of action, though he believes that all of its Web businesses could be sold separately at a value of $39 per share, which compares quite favorably to its current price of about $28 per share.
The note was issued on Friday and boosted shares of Yahoo! from $27.15 on Thursday to $27.93 at Friday’s opening.
If Yahoo! were to outsource its paid search operations (to a rival like Google, even), cut a quarter of its staff and restructure its graphic display advertising, its stock price could see levels around $45 per share, according to Lindsay.
Still, Lindsay does not think Yahoo! will be so bold as to take such big measures to “right the ship,” as he put it. “We believe that Yahoo still has a potentially high intrinsic value. We believe, however, that to stop the inevitable slide into irrelevance the management team must consider more radical actions and strategies.”
He pointed to the recent frenetic activity on the advertising acquisition front as part of the basis of his valuation of Yahoo!’s potential.
While Yahoo! is far from fire sale desperation, it seems ripe for a significant change. It, like Microsoft, has failed to make big splashes in the pool that Google dominates. Its recent improvements to its search engine interfaces are far from what they need to start even the slightest shift in the tides.
Lindsay’s assertions should serve as fodder for interesting discussions for the next week or so, and it would be wonderful to see Yahoo! take even a small step in this recommended direction.
Source:
http://www.redherring.com/Home/22929
Network
