Yahoo ( YHOO ) alive and well

Everyone has left YHOO for dead. Every news article says revenue is down. Yahoo is currently at $24.15 and was trading at $29.37 a month ago and at $39.69 at the beginning of the year. There are stories out that say Yahoo's profit is down 37% from last year. Jim Cramer actually trashed GOOG yesterday and today on Mad Money. Is he trying to use his appeal to try to force Yahoo down? Is it just a bad company or sour grapes from Jim? Shame on you Jim.

Following is Yahoo's report.

EPS $.11
Expectations: $.11
Last year EPS $.17

Revenue: $1.58 billion
Revenue last year: $1.33 billion

Revenue with TAC subtracted: $1.12 billion
Expectations: $1.14 billion

Guidance for quarter 4: $1.15 billion to $1.27 billion
Expectations: $1.2 billion to $1.39 billion

Now Yhoo is up $.68 in after hours trading.

So what gives?

Yahoo is down from $.17 to $.11 from a year ago. They missed their revenue target. They guided lower. The street must see something that the rest of media doesn't see.

1) Yahoo has Panama (their platform to compete with Google's adwords) on line and will have it out of beta in the first quarter of 2007.

2) The $.11 target is based on GAAP guidelines which is a new law (as of the beginning of the year) required for all companies. Last year YHOO reported on a Proforma or a non GAAP basis which lets companies back out option and one time expenses (this partially explains an EPS of $.17). A direct comparison cannot be made and is irresponsible for the media to report this way (This is very misleading and is lying by omission). Here is another little tidbit of information: While all companies have to report on a GAAP basis, they can still report 2 numbers. To further make this process misleading, the analysts will evaluate 2 companies 2 different ways. They will have EPS targets for YHOO on a GAAP basis and EPS for GOOG on a non GAAP basis. Even though GOOG will report both GAAP and non GAAP number, the analysts will match the non GAAP numbers. This allows the analysts to bypass the new law for some companies.

3) YHOO grew the top line by almost 20% over last year. So there is still growth coming from Yahoo.

4) YHOO is down 18% from a month ago and 39% from the beginning of the year. How much more can YHOO be beat up.

Yahoo has one of the top web properties. With a way to better monetize search with Panama, they will see growth in ad revenue next year. The revenue growth will be in line with the rest of search. There has not been a lack of people on Yahoo's properties....There has not been full capitalization of the visits. Yahoo is growing and will continue to grow next year. We shall see how the market rates Yahoo's earnings over the next week. I would not recommend that you put your money in YHOO right at this point in time.....Let's see how the street rates the earnings first. Maybe a good entry point exists real soon.

Good luck investors

Disclosure: I am long YHOO