It's hard to live up to the hype.
The pressure was on Yahoo! (Nasdaq: YHOO) to step up to the plate and swing for the fences in the most important quarterly at-bat of its corporate life ... and the company laid down a bunt single.
Revenue inched just 9% higher -- or 14% higher excluding traffic acquisition costs -- but adjusted profitability and free cash flow fell slightly over last year's first-quarter showing. In the end, this doesn't appear to be a company that either needs Microsoft (Nasdaq: MSFT) or is justified in refusing its advances. It may have narrowly topped Wall Street's hosed-down expectations, but its current-quarter guidance calls for meager top-line gains of 2% to 14% with yet another year-over-year decline in operating income.
In the end, last night's report and subsequent conference call aren't enough to push this deal to any kind of resolution.
That is the worst kind of stalemate, especially when both halves of the Microhoo equation are wearing their egos on their sleeves.
Yahoo! actually posted declines in both its international and affiliate network revenue, two key areas where the company was supposed to fill gaping holes in Microsoft's online strategy. That may lead Microsoft to reconsider whether Yahoo! is its best match, but Yahoo! may be doing a little thinking on its own, since it put up healthy advances in its domestic display-advertising stronghold.
If you've tired of the Microhoo moniker, join the club. This was supposed to be the earnings report that settled things once and for all. A bad quarter and Yahoo! would have fallen into Microsoft's outstretched arms. A good quarter and Yahoo! would have had every right to tell Microsoft to move along. Instead, we take another swan dive into mediocrity's slow-drying cement.
Get a room, Microhoo? Sure, but it's starting to look more like another waiting room instead.
News to go
If you wanted to see fence-swinging, your best bet was VMware (NYSE: VMW). The virtualization software leader posted a 69% spike in quarterly revenue. Earnings growth wasn't as kind, but top-line growth is what you really like to see in an early-stage growth stock like VMware as an indicator of its virtualization solutions sticking to corporations. The company is looking to grow its top line at a 50% clip for all of 2008, so expect the good times to continue.
Evoking the wrath of a minority investor scorned, Craigslist is being sued by eBay (Nasdaq: EBAY) over the recent dilution of the 28.4% stake that eBay acquired four years ago. Why would eBay go after something so petty when it has more pressing matters to contend with, like getting its namesake auction website back on track or justifying the lofty price tag it paid for Skype? I guess we'll have to see legal developments unfold to get the answers we crave. Is there a "settle it now" button available, to end this quickly and amicably?
If you're not into the Microhoo brand, maybe Glaxtris will win you over. GlaxoSmithKline (NYSE: GSK) is buying Sirtris Pharmaceuticals (Nasdaq: SIRT) in an all-cash deal. The $22.50-a-share price is a healthy 84% premium to where Sirtris closed yesterday. The deal will give Glaxo a foothold in the promising biotech realm of sirtuins, an enzyme class that is showing promise in the aging process of certain diseases. Kudos to Sirtris for keeping the deal quiet, since its stock actually fell sharply yesterday ahead of the announcement. You can pity those who sold, or you can cross your fingers and hope that an already long corporate name doesn't grow even longer as SirGlaxoSmithKline.
Hoping to put the royalty back into its kinghood, reports out of England find Burger King (NYSE: BKC) gearing up to launch a $170 burger in select locations of the United Kingdom. Made with Kobe beef and topped with ritzy add-ons like foie gras and a rare bleu cheese, it's clearly more a headline-snagging novelty than a pricing strategy shift. Let's hope so, anyway. What's next? Replacing the paper crowns they give away with actual jewel-encrusted ones?
Sen. Hillary Clinton won the Pennsylvania Democratic primary last night. If you're looking for coverage on the pivotal vote, complete with exit polls, colorful commentary, and intricate maps of red and blue states, you have most definitely clicked on the wrong website this morning.
Have a great day out there.
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