Morgan Stanley Ib Report

MORGAN NORTH STANLEY RESEARCH AMERICA Morgan Stanley & Co. Incorporated Mary Meeker Mary.Meeker@morganstanley.com +1 (1)212 761 8042 David A Joseph David.Joseph@morganstanley.com +1 (1)212 761 3365 January 30, 2008 Stock rating Overweight-V Industry raft Attractive Anant A Thaker Anant.Thaker@morganstanley.com +1 (1)212 761 7038 hick! CQ4: to a greater extent Patience Required In line to soften CQ4 - bumpkin! inform a solid CQ4 (+21% Y/Y tax revenue harvest-tide in marrow Owned & Operated sites, 73% of salary revenue) and retained a relatively upbeat spotter for its core business implying 14% Y/Y revenue growth in C2008E (our prior estimate, an acceleration from 12% in C2007), when adjusting for re-negotiated broadband deals and the sale of Overture Japan. Yahoo! also indicated, in effect, it essential to invest a net $100MM+ more than evaluate in opex (on a base of $5.7B in C2008E revenue) to: 1) improve methods for get ad inventory + improve monetization; 2) improve substance abuser do it of consumer starting points home page, search, mail, My!, mobile + verticals like sports / finance / discussion; and 3) adapt to changes link up to to social networking / widgets / componentization / mobile / video.

It all told sounds good, and shares were down 10% in after-market trading. New news related to non-core operations leads to reduction in C2008E estimates The problem is credibility. While Yahoo!s EBITDA trajectory has told a solid story in recent years, the trajectory of operating income (incl. stock-comp.) has been poor: $1.1B in C2005; $941MM in C2006; $695MM in C2007 and $605MM in C2008E. Shareholder disappointme nt has been significant. On its Tuesday do! ugh call, in addition to the opex surprise (which we support, btw), the company indicated it had: 1) renegotiated its high-margin broadband deals (with AT&T and Rogers) and its C2008E revenue would be reduced by $150-200MM (we reelect $160MM+), which, in effect, falls to the bottom line, and 2) the change in its...If you deal to get a full essay, order it on our website: OrderEssay.net

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