Yahoo reported earnings numbers yesterday.  Numbers were about as expected and YHOO has had a very nice 6 month run in its shares.   However, if you were a casual reader of news online, or if you get your financial news from your local news, you better check the facts.

There isn’t much that burns me more than a local news reporter who will say that Yahoo ‘earned‘ $1.57 billion dollars this quarter.  Cut to the witty banter with their co-anchor about “must be nice” or some other thoughtless comment.  What is the point, if you can’t get it right.  The difference between earnings and revenue is a extreme as the difference between the number of wins a team has and the number of games they play.  Imagine if your sports reporter stated that your local NFL team had 16 wins last year.  They are that different.

There is a site that covers all aspects of the search engine world. They are a solid news source, but they are clearly allowing a non-investor to create their own summary for the daily newsletter.  Read below:

From a daily newsletter that I receive:

Yahoo Q2 Earnings: $1.57B, Down 13 Percent Vs. 2008
Yahoo announced second quarter earnings of $1.57 billion this afternoon. Compared with the same period a year ago, earnings were down 13 percent. The company is predicting an even more modest third quarter: “in the range of $1,450 million to $1,550 million.” Search revenues were $359 million, off 15

The article that it linked to was just fine.  That would lead me to believe that they are having someone who isn’t as savvy, or doesn’t care much abou their job, type the summaries.

Here is a quick guide for the lazy and ill-informed when reporting on earnings numbers:

• Revenue does not equal earnings!
• Annual sales do not equal earnings!

Important stuff.  Please get it right.  People are listening and reading.

Bob and Scott

IBM kicked butt this quarter.  Google hit it pretty well.  No big concerns there.

Friday is a big day.  Own financials?  Tomorrow will be a big day for you.

Friday, July 17
Before The Open Actual First Call Yr Ago Yr/Yr Rev
A.O. Smith AOS 0.50 1.03
Amcol ACO 0.29 0.58
Badger Meter BMI 0.54 0.48
Bank of America BAC 0.28 0.72
BB&T Corp BBT 0.21 0.69
Bemis BMS 0.41 0.46
Citigroup C -0.31 -0.49
First Horizon FHN -0.33 -0.11
First Niagara FNFG 0.14
General Electric GE 0.23 0.54
Marshall & Ilsley MI -0.69 -1.52
Mattel MAT 0.00 0.03
Prosperity Bancshares PRSP 0.50 0.52
Webster Financial WBS -0.44 0.42

Other major business events and economic events scheduled for Friday:

Commerce Department releases housing starts for June, 8:30 a.m.
House Financial Services Committee hearing on the president’s proposed financial overhaul.
European Union foreign trade stats for May are released.

Dead Cat Bounce

As someone who has been following Citi closely, the Citi results are about what I would have expected.  The numbers weren’t good enough to force the stock to explode today, but at the same time, they weren’t to the point where they should take out much of the big runup that is built into the stock.

Keep in mind that today is options expiration.  We will swing wildly today.  My guess is that we could crack $3.70 down and push $4.30 up.   The option contracts would call for this to close around $4 per share.  Direction should be determined next week.

I am fairly certain there will be somewhat of a wait and see until the bank stress test results are revealed 5/4/2009.

I am on vacation and will be out all day, but I get a sense that Citi could be a good short and long trade today. A short at the current level of $3.42 followed by a cover and follow up buy around $3.31, with a later sale of that position around $3.38, could probably be had. I wouldn’t make this trade if I wasn’t available to bail if things went bad, but I have a sense that we will see these numbers.

Good luck to anyone who gives this a shot. Today’s activity could very well be a good amount of short covering leading up to earnings.