The Zacks Analyst Blog Highlights: Yahoo!, Google, Facebook, Microsoft and Archer Daniels Midland

Zacks


For Immediate Release

Chicago, IL – February 8, 2013 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Yahoo! Inc. (YHOO), Google Inc. (GOOG), Facebook (FB), Microsoft (MSFT) and Archer Daniels Midland Company (ADM).

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Here are highlights from Thursday’s Analyst Blog:

Yahoo, Google Strike Global Ad Deal

Yahoo! Inc. (YHOO) has signed a global, non-exclusive contextual advertising deal with Google Inc. (GOOG) to generate impressive revenue growth in future years. Following the news, shares of Yahoo rose more than 1.5% in after-hours trading.

Google ads will now appear on various Yahoo properties and certain co-branded sites using Google's AdSense for Content and AdMob services. Google will retain a part of the revenues generated from the ads displayed on its partner sites. Though the exact ratio wasn't disclosed, website owners who display the kind of ads covered in the agreement would likely get to keep 68% of the revenues.

Contextual advertising is a form of targeted advertising in which the content of an ad is in direct correlation to the content on the web page. Hence, Yahoo will be able to display contextually relevant ads on its web properties, including Yahoo Sports and Yahoo News.

This will help the company to improve its search revenues going forward. Last quarter, the company’s search revenues were up both sequentially as well as from the year-ago quarter due to improvements in the quality of ads.

The alliance will also benefit Google by providing it with additional space to run its ads and increase its advertising revenues. Last year, Google's ad sales on its partner sites totaled $12.5 billion.

The deal comes seven months after Marissa Mayer, formerly one of Google's top executives, took over as the CEO of the company. Analysts have been predicting that Mayer's old ties with Google might eventually improve its relationship with Yahoo and help Mayer to produce more impressive growth in future years.

However, confidence in Yahoo’s prospects remains low, given the growing success of archrival Google and Facebook (FB). Facebook has become extremely popular with users, so much so that it is already the most popular social networking platform.

On the other hand, Yahoo has repeatedly failed to deliver. The company's revenues continued to decline for three consecutive years before registering a small gain last year. Yahoo already has a broad search and advertising partnership with Microsoft (MSFT), which did not turn out as well as it had hoped. The company is steadily losing market share and it remains to be seen whether the current CEO can reverse the trend.

Though the deal could have some positive impact and help Yahoo to generate additional ad dollars, we will take a wait-and-see approach because Yahoo is still struggling despite Mayer’s sincere efforts on all fronts.

Archer Daniels Boosts Dividend

Archer Daniels Midland Company (ADM) has increased its quarterly dividend by 8.6% to 19 cents per share from its earlier payout of 17.5 cents per share. As a result of this revision, the company’s annualized dividend stands at 76 cents per share.

The increased dividend, which is the 325th successive quarterly payout, will be paid on Mar 13, 2013, to stockholders of record as of Feb 20, 2013. The dividend yield based on the new payout and the last closing market price is approximately 2.5%.

Archer Daniels has been increasing dividend every year since 2002. Starting from 5 cents in 2000, the quarterly dividend payout has now increased nearly four times to the current level of 19 cents. The current dividend hike comes after 5 quarters. The last dividend hike of 1.5 cents or 9.4% from 16 cents was announced on Nov 15, 2011.

It is evident from the company’s history of dividend payment that it is always on the lookout for maximizing shareholders’ wealth.

The news of the dividend hike comes immediately after the company’s strong second quarter 2013 results that were reported earlier this week. Archer Daniels reported earnings of 60 cents per share, up 17.6% from the year-ago quarter and beating the Zacks Consensus Estimate by a penny. Net sales increased 6.9% year over year to $24,921 million, significantly above the Zacks Consensus Estimate of $21,957 million.

The outperformance was mainly attributable to improved performances at Oilseeds and Agricultural Services segments, partially offset by weak results at the company’s Corn Processing segment.

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Read the analyst report on YHOO

Read the analyst report on GOOG

Read the analyst report on FB

Read the analyst report on MSFT

Read the analyst report on ADM

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