Yahoo (YHOO) Earnings Preview: Solid, Not Blowout

Yahoo (YHOO) reports earnings after the close. We will be analyzing the release and conference call live here.

As we've noted, we expect revenue and EPS to be in the high end of the company's forecasted range. The company's sources confirmed this through the New York Post this morning, while also telling the market not to expect a blow-out:

Several sources close to Yahoo! said the company will not blow the lid off earnings, but will likely beat analysts' expectations of 9 cents a share and revenue estimates, excluding traffic acquisition costs, of $1.32 billion.

Translation: EPS will be $0.11-$0.12, versus the $0.09 consensus. Revenue will likely be $1.36-$1.37 billion, up 16% (versus the 12% projected).

Given that the company has already essentially announced the earnings, the guidance is the only remaining question. It has to go up by more than the Q1 outperformance, or Yahoo will be up the creek. Why? Because this is not the time to be conservative, especially in the back half of the year. If Yahoo doesn't raise its guidance considerably, this will be because it can't. And if it can't, it might as well sign the bill of sale today at the current bid

Key Metrics

• Gross Revenue: $1.82 billion consensus (guidance range $1.68 billion - $1.84 billion). Expect high-end or above range ($1.85 billion)
  
• Net Revenue: $1.32 billiion consensus (guidance $1.28 billion to $1.38 billion). Expect at least $1.36 billion.
  
• EBITDA: guidance range $400-$450 million.
• EPS: $0.09 consensus. Should be plenty of upside ($0.11-$0.14).
• Outlook:
  • June: Current consensus: $1.37 billion revenue, $0.11 EPS.
    
  • 2008: Consensus is $5.62 billion revenue, $0.44 EPS. This has to go up by more than the Q1 outperformance.

See Also: LIVE ANALYSIS: Yahoo (YHOO) Q1 Earnings After The Close