Saturday, August 23, 2008

Yahoo: Future TV Convergence, Technicals, Options

I'm looking at Yahoo again, it popped higher along with the overall market on Friday. Here's a look at the chart on Tuesday's set up and Friday's chart.

Tuesday (8/19/08)

Friday (8/22/08)

We're finally starting to hear news about Internet/TV convergence, with news from Intel and Yahoo this week (Intel and Yahoo! to Bring the Internet to Television). It's about time, I think it's a huge opportunity for Yahoo given it's huge internet property base and programming/branding opportunities. With the ability to use a set top box or direct TV integration to converge the two mediums, it will be a milestone when people catch on.

With so much video content on the internet, it was inevitable that this would occur. I think internet programming will slowly take over the advertising base of regular television network programs. Yahoo needs to lever its audience base, programming abilities, and cash to consolidate this industry. As you can see there is a huge fragemented market and I see it with financial internet sites, and with other genres, and I believe they are competing directly with CNBC, Fox News, and Bloomberg for advertising revenue even though they have their own internet sites. You can see internet networks and television networks overlapping as well, partnering up, but with internet available on HDTV now it could sever the friendship. With so many different internet programs, and with speeds allowing for video streaming and HDTV integration, the big network owners (Disney, News Corp, GE, Time Warner, Viacom) definatley could use an internet platform like Yahoo to converge their programming outlets and advertising base. There's also a war in search going on right now and Google is dominating the space. In July, according to Comscore, Google's search market share registered 61.9% of all hits, while Yahoo had 20.5%, and Microsoft 8.9%. In order to compete with Google in search, a Microsoft buy out of Yahoo seems right. Yahoo is also leveraging it's services to get into the mobile space (Yahoo OneSearch finds a home on your Nokia, Yahoo! launches mobile voice search in RP) which is also a big market to tap. It's also interesting that more and more network content is able to be streamed on the internet, for example lets you watch full episodes of current and old television programs from Doogie Howser MD to the Colbert Report. Also movies via are also able to be seen on your HDTV with an enabled device. Convergence is here!

Volatility and Put/Call Ratio Analysis Snapshot
Charts from

Schaeffers Implied Volatility Index (8/22/08)

YHOO Put vs. Call Open Interest Spread

YHOO Put/Call Volume

Looking at overall sentiment, it looks like the Put/Call Volume chart has been trending down since March right after the buy out offer from Microsoft. There could be a pop in this stock before put activity starts to shine. Also the Schaeffers Volatility Index is at lows not seen since June, and could break down further if there is no catalyst. The next burst of volatility could be forming a bullish case for the stock however it all depends on timing, as no buyout offer or a quarter with lower growth would bring in more bearish sentiment and push the stock down even further. I believe that a potential buy out is bringing in most of the call open interest.