Yahoo Layoffs: Financial Impact

Mar-05

Jun-05

Sep-05

Dec-05

Mar-06

Jun-06

Sep-06

Dec-06

Mar-07

Jun-07

Sep-07

Dec-07E

FY 2005

FY 2006

FY 2007E

FY 2008E

FY 2009E


.	Analysis By:
.	Silicon Alley Insider
.
.
.	Current
.	Revenue	$6,425,679	$7,066,500	$8,016,558	$9,081,519
.	Costs	$5,484,713	$6,407,986	$7,295,068	$8,264,183
.	Operating Profit	$940,966	$658,514	$721,490	$817,337
.
.	Layoffs (Range)
.	Headcount Reduction	500	1,000	1,500	2,000	2,500
.	Estimated Cost Per Employee	$125,000	$125,000	$125,000	$125,000	$125,000
.	Cost Reduction	$62,500,000	$125,000,000	$187,500,000	$250,000,000	$312,500,000
.
.	Impact on 2008
.	Revenue	$8,016,558	$8,016,558	$8,016,558	$8,016,558	$8,016,558
.	Pro Forma Costs	$7,232,568	$7,170,068	$7,107,568	$7,045,068	$6,982,568
.	Operating Profit	$783,990	$846,490	$908,990	$971,490	$1,033,990
.	Change	8%	15%	21%	26%	30%
.


.
.
.
.
.
.
.
.		Mar-05	Jun-05	Sep-05	Dec-05	Mar-06	Jun-06	Sep-06	Dec-06	Mar-07	Jun-07	Sep-07	Dec-07E	FY 2005	FY 2006	FY 2007E	FY 2008E	FY 2009E
.	Revenues	$1,173,742	$1,252,997	$1,329,929	$1,501,000	$1,567,055	$1,575,854	$1,580,322	$1,702,448	$1,671,850	$1,697,920	$1,767,506	$1,929,224	$5,257,668	$6,425,679	$7,066,500	$8,016,558	$9,081,519
.	Y/Y Change					34%	26%	19%	13%	7%	8%	12%	13%		22%	10%	13%	13%
.
.	Gross Profit	$706,818	$752,839	$795,548	$906,262	$909,112	$930,087	$899,202	$1,011,555	$958,213	$1,014,908	$1,027,306	$1,118,950	$3,161,467	$3,749,956	$4,119,377	$4,649,604	$5,267,281
.	Margin	60%	60%	60%	60%	58%	59%	57%	59%	57%	60%	58%	58%		58%	58%	58%	58%
.
.	Operating Income	$247,363	$261,357	$270,057	$328,948	$201,212	$229,587	$202,340	$307,827	$169,027	$184,957	$150,192	$154,338	$1,107,725	$940,966	$658,514	$721,490	$817,337
.	Margin	21%	21%	20%	22%	13%	15%	13%	18%	10%	11%	8%	8%		15%	9%	9%	9%
.
.	Net Income	$204,560	$754,689	$253,773	$683,208	$159,859	$164,330	$158,529	$268,673	$142,424	$160,567	$151,286	$156,653	$1,896,230	$751,391	$610,930	$650,945	$737,419
.	Margin	29%	100%	32%	75%	18%	18%	18%	27%	15%	16%	15%	14%		20%	15%	14%	14%
.


.	EPS	$0.14	$0.51	$0.17	$0.46	$0.11	$0.11	$0.11	$0.19	$0.10	$0.11	$0.11	$0.11	$1.27	$0.52	$0.43	$0.46	$0.54
.	Shares Out (Diluted)	1,477,811	1,484,200	1,486,876	1,496,942	1,493,307	1,476,642	1,442,429	1,419,143	1,418,225	1,403,819	1,395,056	1,362,377	1,485,591	1,457,686	1,428,532	1,399,962	1,371,962
.	Dilution					1%	-1%	-3%	-5%	-5%	-5%	-3%	-4%		-2%	-2%	-2%	-2%
.
.	REVENUE BY CATEGORY
.	Owned and Operated Sites					716,568	752,414	741,919	850,986	817,346	886,643	921,908	1,063,733		$3,061,887	$3,689,630	$4,427,555	$5,313,066
.	Affiliated Sites					664,286	633,831	628,455	638,748	651,273	599,389	621,693	638,748		$2,565,320	$2,511,103	$2,636,658	$2,768,491
.	Marketing Services	1,024,796	1,094,301	1,159,572	1,315,303	1,380,854	1,386,245	1,370,374	1,489,734	1,468,619	1,486,032	1,543,601	1,702,481		$5,627,207	$6,200,733	$7,064,214	$8,081,558
.	Fees	148,946	158,696	170,357	185,697	186,210	189,609	209,948	209,948	203,231	211,888	223,905	226,744		$795,715	$865,768	$952,345	$999,962
.	Revenues	$1,173,742	$1,252,997	$1,329,929	$1,501,000	$1,567,064	$1,575,854	$1,580,322	$1,699,682	$1,671,850	$1,697,920	$1,767,506	$1,929,224		$6,422,922	$7,066,500	$8,016,558	$9,081,519
.	Y/Y Change					34%	26%	19%	13%	7%	8%	12%	14%
.	Seq. Change						1%	0%	8%	-2%	2%	4%	9%
.
.	O and O Y/Y Change									14%	18%	24%	25%			21%	20%	20%
.	Affiliated Sites Y/Y Change									-2%	-5%	-1%	0%			-2%	5%	5%
.	Marketing Services Y/Y Change					35%	27%	18%	13%	6%	7%	13%	13%			10%	14%	14%
.	Fees Y/Y Change					25%	19%	23%	13%	9%	12%	7%	8%			9%	10%	5%
.
.	REVENUE BY GEOGRAPHY
.	United States	818,726	869,517	922,860	1,056,406	1,097,134	1,070,134	1,054,048	1,144,702	1,100,757	1,118,514	1,194,911


.	International	148,946	383,480	407,069	444,594	470,017	505,720	526,274	557,746	571,093	579,406	572,595
.	Revenues	$967,672	$1,252,997	$1,329,929	$1,501,000	$1,567,151	$1,575,854	$1,580,322	$1,702,448	$1,671,850	$1,697,920	$1,767,506
.
.	US Y/Y Growth					34%	23%	14%	8%	0%	5%	13%
.	International Y/Y Growth					216%	32%	29%	25%	22%	15%	9%
.
.
.	REVENUE EX TAC
.	Marketing Services	671,809	716,416	761,758	882,252	901,497	933,046	911,519	1,015,221	979,845	1,031,878	1,058,696	1,191,482
.	Fees	148,946	158,696	170,357	185,697	186,210	189,609	209,948	209,948	203,231	211,888	223,905	226,744
.	Revenues	$820,755	$875,112	$932,115	$1,067,949	$1,087,707	$1,122,655	$1,121,467	$1,225,169	$1,183,076	$1,243,766	$1,282,601	$1,418,226
.	Y/Y Change					33%	28%	20%	15%	9%	11%	14%	16%
.	Marketing Services Y/Y					34%	30%	20%	15%	9%	11%	16%	17%
.	TAC	352,987	377,885	397,814	433,051	479,357	453,199	458,855	474,513	488,774	454,154	484,905	510,998
.	% of Affiliate Revenue					72%	72%	73%	74%	75%	76%	78%	80%
.
.
.	United States (Ex-TAC)	618,892	660,045	761,758	808,537	826,665	836,504	836,596	921,905	882,932	935,689	962,098
.	International (Ex-TAC)	201,863	215,067	170,357	259,412	261,033	261,033	284,871	306,030	300,144	308,077	320,503
.	Revenues	$820,755	$875,112	$932,115	$1,067,949	$1,087,698	$1,097,537	$1,121,467	$1,227,935	$1,183,076	$1,243,766	$1,282,601


.	United States Y/Y					34%	27%	10%	14%	7%	12%	15%
.	International Y/Y					29%	21%	67%	18%	15%	18%	13%
.
.	OPERATING INCOME (ex Stock)
.	United States	270,415	291,244	306,031	351,849	335,269	340,598	365,550	410,239	341,518	362,337	338,423
.	International	74,647	77,196	79,091	106,865	99,663	116,260	108,188	130,150	118,517	111,292	127,886
.	Operating Income	$345,062	$368,440	$385,122	$458,714	$434,932	$456,858	$473,738	$540,389	$460,035	$473,629	$466,309
.
.	US Operating Margin	33%	33%	33%	33%	31%	32%	35%	36%	31%	32%	28%
.	International Operating Margin	50%	20%	19%	24%	21%	23%	21%	23%	21%	19%	22%
.	Overall Operating Margin	29%	29%	29%	31%	28%	29%	30%	32%	28%	28%	26%
.
.	US Operating Margin (Ex TAC)	44%	44%	40%	44%	41%	41%	44%	44%	39%	39%	35%
.	International Op Margin (Ex TAC)	37%	36%	46%	41%	38%	45%	38%	43%	39%	36%	40%
.	Overall Operating Margin (Ex TAC)	42%	42%	41%	43%	40%	42%	42%	44%	39%	38%	36%
.
.	Normalized Free Cash Flow	$317,566	$299,874	$344,637	$329,702	$342,946	$357,830	$287,915	$277,959	$368,750	$328,193	$309,562
.	Y/Y Change					8%	19%	-16%	-16%	8%	-8%	8%
.	Seq. Change						4%	-20%	-3%	33%	-11%	-6%
.	Margin	27%	24%	26%	22%	22%	23%	18%	16%	22%	19%	18%


.
.	CASH FLOW
.	Cash Flow From Operations	$385,715	$404,195	$440,131	$481,342	$384,881	$429,684	$389,654	$167,357	$441,244	$405,603	$456,712
.	Y/Y Change
.	% of Total
.	Capital Expenditures	$68,149	$93,651	$95,494	$151,640	$141,747	$175,078	$240,761	$131,550	$118,019	$144,474	$147,150
.	Y/Y Change
.	% of Revenue
.	FREE CASH FLOW	$317,566	$310,544	$344,637	$329,702	$243,134	$254,606	$148,893	$35,807	$323,225	$261,129	$309,562
.	Y/Y Change
.	Margin
.
.	BALANCE SHEET
.	Cash, Equivalents + Marketable Secs.	$2,580,976	$3,394,524	$3,183,691	$2,560,834	$2,428,490	$2,688,555	$2,109,051	$2,601,399	$2,345,866	$2,391,137	$2,212,147
.
.	Inventory	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0
.	Y/Y Change
.	% of Revenue
.
.	Debt (Current + Long-Term)	$750,000	$750,000	$749,995	$749,995	$749,993	$749,971	$749,960	$749,915	$749,763	$749,632	$749,628


.
.	VALUATION
.	Price	$21.94
.	Shares Outstanding (Diluted)	1,395,056
.	MARKET CAPITALIZATION	$30,607,529
.
.	Market Capitalization
.	+ Debt	$749,628
.	- Cash	$2,212,147
.	ENTERPRISE VALUE	$29,145,010
.
.	VALUATION RATIOS
.	P/E:	EPS	P/E
.	CY 2007E	$0.43	51	x
.	CY 2008E	$0.46	47	x
.	CY 2009E	$0.54	41	x

Quotes may be delayed up to 20 minutes. Information is provided 'as is' and solely for informational purposes, not for trading purposes or advice. Disclaimer