Sanford C. Bernstein a wall street brokage, cut its price target on Yahoo, saying that the company’s future prospects look bleak, especially if the proposed search advertising deal with Google is not completed before the end of 2008.
It is increasingly likely that the deal will be delayed by regulators, given that the U.S. Justice Department has recently hired Sandy Litvack, its former antitrust chief.
Bernstein, cut its price target to $24 from $26.
Bernstein added that Yahoo’s stand alone valuation to shareholders could fall to $21 per share if the proposed deal with Google is significantly delayed or stopped by the regulators in October.
Bernstein said, an outsourcing deal with Microsoft would be worth about $25 to $26 to Yahoo’s shareholders.
“Outsourcing to Microsoft would allow a bigger paid search deal that would be less likely to be derailed by regulators and would allow much greater cost savings on the part of Yahoo”.
“Better still, in our view, would be selling the paid search operation to Microsoft”.
Yahoo senior management has to think outside the box – for joint ventures with other Company’s online from different Country’s or buy them out – video sharing websites, create similar sites like kiji and place ads on them or charge for posting ads at the site,buy or create an online free gaming website supported by ads or let the members earn free credits so they can exchange them for money and buy advertising credit and etc.
Good Luck to Microsoft / yahoo and all the Company’s online
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