Here's Why Shares of Yahoo! and Zillow Are Moving Higher Today

With tech stocks rising, both Zillow and Yahoo! are outperforming. Here's what investors need to know.

Apr 16, 2014 at 2:55PM

On Wednesday, tech investors enjoyed a brief reprieve from recent selling as the Nasdaq Composite Index (NASDAQINDEX:^IXIC) rose nearly a full percentage point in early trading. It's worth noting, however, that two outliers are standing out from the pack. Among today's biggest winners are Internet extraordinaire Yahoo! (NASDAQ:YHOO) and online real estate specialist Zillow (NASDAQ:ZG).

Yahoo-baba is winning big
Shares of Yahoo!, for one, are currently up more than 6% following yesterday's after-the-bell release of encouraging first-quarter results. Yahoo! reported GAAP revenue, which fell 1% year over year to $1.133 billion, which translated to 17% lower GAAP net earnings of $0.35 per diluted share.


Yahoo! headquarters. Source: Wikimedia Commons.

On an adjusted basis, however, Yahoo!'s net earnings remained flat from last year at $0.38 per share. Analysts, on average, were looking for adjusted earnings of $0.37 per share on sales of just $1.08 billion. In short, while the results may not seem overwhelmingly positive at first, investors are rightly rejoicing as Yahoo! finally exceeded expectations on the revenue front for the first time in over a year -- a performance largely driven by search and display revenue, which increased 5% and 2%, respectively.

If that wasn't enough, Yahoo!'s supplementary documents showed fourth-quarter sales for Alibaba Group rose roughly 66% to $3.1 billion. Alibaba's net income also jumped 110% to $1.4 billion. That's a great thing considering Yahoo! has already pledged to sell roughly half of its massive 24% stake in Alibaba during the Chinese online commerce giant's impending U.S. IPO.

Zillow secures a valuable employee
Meanwhile, Zillow's nearly 4% rise early on is harder to peg, with no press releases or notable news today. What's more, while Zillow has settled up around 3% today as of this writing, shares have risen more than 7% so far this week. So what gives? 

I think this week's gains can be largely chalked up to a King County Superior Court decision on Monday evening, which denied a motion by Zillow competitor Move (NASDAQ:MOVE) to block Zillow's employment of Errol Samuelson.


Errol Samuelson has joined Zillow. Source: Move.

Samuelson, for his part, formerly worked as president of Move subsidiary until March, when he unexpectedly defected to Zillow. Zillow promptly appointed him the role of chief industry development officer, where he'll tackle the tough job of brokering partnerships with other parties, which are -- by many measures -- Zillow's competitors. 

Shortly afterward, and keeping in mind Samuelson never signed a non-compete agreement at his former employer, Move brought the lawsuit against Zillow claiming Samuelson was privy to sensitive information, which should not be shared. Further underscoring Samuelson's apparent importance was the National Association of Realtors, which also joined Move's lawsuit last month.

Unfortunately for the folks at Move and NAB, the court ruled they simply hadn't proven Samuelson would disclose trade secrets to Zillow or that he misappropriated them when he left.

Worse yet, only two weeks after Samuelson's new appointment, Zillow announced it had hired a new VP of industry development in Curt Beardsley, whom Move had only just tapped to serve as Samuelson's replacement. To Zillow's credit, Beardsley wrote in his resignation letter that he had "lost faith in Move," and reached out himself to Zillow to see if there was a position available for him.

All things considered, if the sentiment of these two former senior Move employees is any indication, Zillow's leadership position in the online real estate market appears as solid as ever.

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Steve Symington has no position in any stocks mentioned. The Motley Fool recommends Yahoo! It recommends and owns shares of Zillow. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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