Words and pies were fit to be served this past week. Let's take a closer look.
Serve 'em up, Yahoo!
It was bound to happen. Who ever doubted that Yahoo! (NASDAQ:YHOO) would launch a response to Google's (NASDAQ:GOOG) popular AdSense? Yahoo!'s Overture may have pioneered paid search, but it is Google that has been spreading the love all around by letting content sites of all shapes and sizes redistribute the company's AdWords contextual-ad blocks.
Yahoo! isn't the only company that Google has overtaken in terms of market cap. Google is now valued higher than any other dot-com out there, and that includes Stock Advisor picks eBay (NASDAQ:EBAY) and Amazon.com (NASDAQ:AMZN). But Yahoo! is in a position to do something about it. With 99% of Google's revenue coming from online advertising, Yahoo! has to battle back by trying to ease Google's dominant role in the life of Web publishers everywhere.
On Wednesday, Yahoo! went public with its beta for Yahoo! Publisher Network to serve up relevant text ads on approved sites. It was the first legitimate salvo heaved at Google. The move is significant because Yahoo! has plenty of click-based advertisers in its system, and inventory is what has held any potential entrants back. Now Yahoo! gets a chance to plaster "Ads by Yahoo!" all over cyberspace the way "Ads by Google" have become a Web-surfing staple.
It won't be easy to persuade successful webmasters to switch to Yahoo! unless its ad relevance and payout rates trump what Google has been offering through its AdSense program. Otherwise, Yahoo! will be stuck with the thankless task of catering to the sites that Google has booted or refused. At least it will be interesting to watch. Google's market share is at stake, even if it doesn't exactly feel vulnerable at the moment.
Better ingredients, better earnings report
Looking over the most actively shorted stocks in July, I was surprised to see the name Papa John's (NASDAQ:PZZA). Nearly 2.2 million shares of the popular pizza chain were sold short as of mid-July. That may not seem like a whole lot of people betting against Papa, but the stock trades an average of just 110,000 shares a day. That means that the stock's short interest ratio -- the number of shares held short divided by average trading volume -- is a surprisingly beefy 20 days.
That's why I was anxious to see how Papa John's would fare when it reported earnings on Tuesday. What was the source of the pessimism? It's not as if cheese prices are soaring. Things had gone well enough in its previous quarter that it raised its profit guidance. Domino's (NYSE:DPZ) was set to report a day later, so it couldn't be seen as a sympathy play. Chuck E. Cheese parent and Motley Fool Hidden Gems pick CEC Entertainment (NYSE:CEC) had a dud of a quarter, but that was mostly due to a poorly thought-out summer marketing campaign.
Like its hot grub, Papa John's delivered. Earnings came in strong. Comps rose by 6.1%. The pizza chain found itself hiking its bottom-line targets yet again. The company is now looking to earn between $2.42 and $2.48 a share. Yes, this is very competitive sector, but the company seems to be doing something right. Why bet against better ingredients?
The headlines behind this week's stories:
Until next week, I remain,
Longtime Fool contributor Rick Munarriz enjoys his pizza, but his loyalty to any one chain has never held firm. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.
