Analyst: Fundamentals are deteriorating at Yahoo

An analyst trimmed revenue estimates for Yahoo this morning, noting some of the factors that seems to be bringing the company down with no relief in sight. Collins Stewart analyst Sandeep Aggarwal said in a research note that he believes Yahoo has been hurt more seriously by the weak ad display market, that the Google-Yahoo ad deal has only a 50 percent probability of a positive outcome and the restructuring actions - such as the hiring of consultants Bain & Co. - doesn't bode well for internal retention.

The note reads, in part:

We believe that the fundamentals at YHOO are deteriorating. On the one hand economic headwinds and turmoil in the financial markets are causing weaker display ad revenues. On the other hand changes with the minimum bid with search and a possible GOOG/YHOO deal are causing an outcry among many advertisers. To further complicate the situation is an ongoing loss of talent which might accelerate with the renewed restructuring efforts. We don’t see any near-term upside in the shares of YHOO on fundamental basis. However, we would not rule out a possible MSFT/YHOO deal in the future.