I was bottomfishing in Ebay and Yahoo and today Yahoo preannounced again. It is why I don’t make a living bottomfishing. You have to really know the story to catch a bottom and turn.
I have been talking to some smart folks today and I have no real clear picture. I am now down slightly on the position, but my stop is below $25 so we will see. I won’t look to add until it passes recent highs.
It is obvious that companies are not going to continue to bid up key word prices forever and that like any market, Yahoo is losing pricing power.
Surprised that Google was not down more today.
The bid prices are not the issue at Yahoo. Instead, it’s their outdated auction-only model, which is great for less technical advertisers but horrendous at monetizing search traffic.
Google knows the real dough is in the tail, not extracting maximum value from a few high traffic terms. Now Yahoo gets to play catch up once again, after spending close to a billion on Overture.
Yahoo will see an increase in revenue of 10-20% right off the bat once they switch to their Adwords clone, codenamed Panama.
For your investment’s sake, I hope Panama launches early first quarter.