Jerry, better get Steve on the line.
That's Bernstein analyst Jeffrey Lindsay's conclusion after running the numbers. In a research note, "Whither Yahoo?" Lindsay looks at the likely outcomes and concludes -- surprise! -- a revived Microsoft (MSFT) bid is Yahoo's (YHOO) only chance at anything close to $30 a share.
The possible outcomes, according to Lindsay:
- If regulators derail the Yahoo-Google paid search deal, Yahoo's 2009 revenue growth will be 15% and EPS 46 cents a share. Yahoo share price: $21.
- If the Yahoo-Google (GOOG) search deal goes forward, and the DOJ keeps Sandy Litvack on the chain, 2009 revenue growth will be 26%, and EPS 61 cents. Yahoo share price: $26.
- If Yahoo dumps Panama and outsources paid search to Microsoft (more likely to pass regulatory muster), 2009 revenue grows 12% and EPS 67 cents. Yahoo share price: $26.
- If Yahoo sells its paid search business to Microsoft outright, that would be worth $27 a share, less than Microsoft $33 estimate because Bernstein believes Alibaba and Yahoo Japan shouldn't be included in the deal.
Yahoo has managed to show growth in unique visitors and stem a decline in overall page views. But now it's battling economic headwinds in the U.S., where it derives most of its revenue, making anything other than a Microsoft acquisition the only realistic opportunity for a $30+ outcome for shareholders. Carl?
See Also:
Former Fed Regulator: Litvack Hire Means DOJ Likely To Litigate To Stop Google-Yahoo Ad Deal
Another Reason Google's Stock Crashed
Advertisers Terrified Of Google Yahoo Search Deal
On February 28, Axel Springer, Business Insider's parent company, joined 31 other media groups and filed a $2.3 billion suit against Google in Dutch court, alleging losses suffered due to the company's advertising practices.
