NEW YORK — Yahoo Inc. shares declined Tuesday after the company said its chief executive resigned and that its second-quarter sales may come in near the midpoint or low end of an earlier forecast because of slower display advertising growth.
The Sunnyvale, Calif.-based search engine operator's shares lost 37 cents to $27.75 in afternoon trading.
Late Monday, the company said Yahoo co-founder Jerry Yang, 38, would replace Terry Semel, 64, as CEO.
Semel, who has headed Yahoo since 2001, has long been under pressure from investors unhappy with the company's performance as compared with rival Google Inc., which has emerged as a force to be reckoned with in the burgeoning online advertising market.
Yahoo's stock has declined more than 28 percent since the end of 2005, while Google's stock has grown a little over 24 percent. Semel will remain with the company as non-executive chairman.
On Monday, Yahoo also said it appointed its head of advertising operations, Susan Decker, as president.
During a conference call, Decker said the company is "extremely pleased" with the performance of its Panama advertising system, thus far, but its gains are being offset by slower display advertising growth. She said the company anticipates its second-quarter revenue excluding traffic acquisition costs will come in between the midpoint and low end of the company's earlier $1.2 billion to $1.3 billion forecast.
In a note to clients Tuesday, Goldman Sachs analyst Anthony Noto lowered his price target on Yahoo to $32 from $34, writing the company is confronting challenges in various areas, including display and search advertising, ongoing audience fragmentation, its changing management and lowered sales expectations. Noto's target price implies he thinks it will trade 13.8 percent above Monday's closing price of $28.12, by year-end.
The analyst also lowered his 2007 through 2009 estimates for Yahoo's sales and earnings before interest, taxes, depreciation and amortization, or EBITDA, and kept his "Neutral" rating on the stock saying investors should "remain on the sidelines."
Noto also wrote that he thinks the company's management changes suggest it's unlikely Yahoo will be sold in the near future.
"Our rationale is that this management team is very close to Terry Semel and, as such, if a deal was going to happen in the near term, they would likely have weathered the financial shortfalls until it was announced," he said.
Source : www.chron.com
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