Oh, what a year 2008 was for online veteran Yahoo! (NASDAQ:YHOO)! Love unrequited and lost, all set against a dramatic backdrop of economic turmoil and falling in the shadow of a big, bad G. Where do we go from here? We'll  find out tomorrow night, when it reports for the fourth quarter and the year.

What Fools say:
Here's how Yahoo!'s Motley Fool CAPS rating stacks up against some of its peers and competitors:

 

Market Cap (billions)

Trailing P/E Ratio

CAPS Rating

Microsoft (NASDAQ:MSFT)

$157.5

9.5

***

Google (NASDAQ:GOOG)

$102.4

24.4

***

Time Warner (NYSE:TWX)

$34.5

9.5

**

Yahoo!

$15.6

17.0

**

eBay (NASDAQ:EBAY)

$15.4

8.9

***

Data taken from CAPS and Yahoo! Finance on Jan. 26, 2009.

"Very overvalued," says All-Star CAPS player wackywebname. "Unfocused strategy. Sadly lagging technology. Panama has been a complete loser. Expensive P/E and P/E/G. Has another 40% decline ahead of it." No holding back here.

Fellow All-Star Vanheezy18 disagrees, though: "I favor [Google] over [Yahoo!] but at this price you have to believe you can double your money in 09 off this stock."

What management does:
Despite the distraction of Microsoft's unwelcome advances and the global economy taking a steel bath, Yahoo! has managed to grow its profit margins while sporting decent revenue growth.

Margins

3/07

6/07

9/07

12/07

3/08

6/08

Gross

58.2%

58.4%

60.3%

59.3%

59.5%

58.9%

Operating

13.9%

13.0%

12.0%

10.2%

9.7%

8.4%

Net

11.2%

11.0%

10.6%

9.5%

14.9%

14.3%

FCF/Revenue

11.6%

11.5%

13.5%

18.9%

23.1%

22.7%

Growth (YOY)

3/07

6/07

9/07

12/07

3/08

6/08

Revenue

15.6%

11.4%

9.9%

8.5%

9.0%

8.5%

Earnings

(60.4%)

(42.1%)

(38.0%)

(12.2%)

44.4%

41.1%

All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
I have been opposed to a buyout all along, but have come to accept the fact that the company may need to be sold. I think it will happen at a much lower price than the company commanded last year, though.

One year ago, Yahoo!'s shares sold for more than 50 times trailing earnings, reflecting lots of investor confidence and hopes for renewed growth. That was before Microsoft's marriage proposal. Now, a P/E of 56 sounds like a pipe dream. Not even Google cracks the 30 mark nowadays. So don't expect that kind of multiple if Mr. Softy comes calling again, or perhaps if Time Warner plays matchmaker for its AOL unit.

Yahoo! is still a fine Internet property and really deserved a happier ending to its independent history. But its search share is evaporating, the traditional portal model may be going out of style, and new CEO Carol Bartz comes to work every day with her hands tied, figuratively speaking. This is certainly not a dream stock anymore.

Microsoft and eBay are Motley Fool Inside Value recommendations. Google is a Rule Breakers selection. eBay is a Stock Advisor pick. Try any of our Foolish newsletters today, free for 30 days. Or just sign up for a free CAPS account to find the identities of your fellow Fools who were quoted above. They might have more to tell you!

Fool contributor Anders Bylund is a Google shareholder but holds no other position in any of the companies discussed here. You can check out Anders' holdings if you like, and Foolish disclosure is the Punxsutawney Phil of financial forecasting.