Yahoo and the Price of Silence
Posted by: Rob Hof on January 30, 2008
Wow, the analysts’ knives are out for Yahoo! this morning, and it’s not just because it announced a disappointing outlook for the coming year. They also feel duped by a management team that apparently refuses to be forthcoming about its intentions. And make no mistake, this silence is costly. Yahoo’s stock is down by about 9% so far today, and it’s not a stretch to think that a good chunk of the resulting $2 billion loss in market cap is thanks to Yahoo’s leaders giving analysts the silent treatment.
Just get a load of some comments from analysts’ reports. …
From Rob Sanderson of American Technology Research: "We are disappointed with guidance and don’t expect investors to have confidence in management’s investment decisions."
From Sandeep Aggarwal at Oppenheimer: "While management believes their spending is well founded to gain market share, they would not quantify where the money is going.... We now believe that YHOO has become a 'show me' story, as management has no credibility with investors as estimates are declining."
From Mark Mahaney at Citi, a more measured dig: "Yahoo!'s disclosure was suboptimal.... Investors are now faced with an approximately $300MM incremental investment with limited details.... Arguably, the biggest issue here, though, is Yahoo!s limited disclosure re: ’08 investments."
I experienced a little of this silent treatment myself. I called and emailed Yahoo to find out if the "strategic workforce realignment"--they've gotta be kidding with that wording, which by the way came only halfway into the conference call, not even in the press release--involved people or jobs. If it's people, they're gone--realigned to the parking lot, as it were. If it's jobs, and those affected can apply for new jobs in the promising areas Yang says he will aggressively invest in, that's different--for both employees and investors.
But not only did I not get an answer for close to five hours, this is what came back in the email from the poor PR person saddled with delivering non-comments: "You are right that it is being reported both ways and I realize this is vague; I'm not in a position to comment further."
I'm used to companies holding back stuff from the press, though I don't think it's a great idea. But why keep analysts in the dark if you think you're doing the right things? As Kara Swisher adroitly puts it in her post today: "Even Punxsutawney Phil (the groundhog) knows that the only way winter ends is if you come out of your hole and don't get scared looking at your own shadow."
Update: Well, Yahoo may pay the ultimate price now: its http://www.businessweek.com/the_thread/techbeat/archives/2008/02/microsoft_final.html">independence.