Peter Kafka

Recent Posts by Peter Kafka

Boo! Citing Spooky Economy, Citi Cuts Targets for Google, AOL, Demand Media.

October 2011 feels a lot like October 2008, and a bet that tech stocks might get beat up a bit in the near future doesn’t seem crazy. So Citigroup analyst Mark Mahaney is pulling back on his price targets for a bunch — but not all — of the companies he covers: He’s shaving Akamai, AOL, Demand Media, Google, Monster Worldwide, Orbitz Worldwide and WebMD.

Note that Mahaney isn’t changing his estimates for these companies’ financial performance — just the way he thinks the market will value them, “primarily to global Macro conditions.”

Still, it’s worth noting some of his specific concerns for some companies that go beyond “the world economy has the circle-the-drain-quality to it.”

AOL: Citi drops its target from $18 to $15 (it’s now trading around $12). “In Q2, we witnessed YHOO, WBMD and AOL report lower Display revenue, which could be signs of increased competition from ad networks and social media for premium ad dollars.”

Demand: Target dropped from $10 to $8, which is about where the stock is trading now. “We view the company’s reliance on Google traffic as still a bit of an overhang. And we believe DMD’s quality content strategy is still something of a work-in-progress.”

Google: Target dropped from $690 to $575, currently trading around $504. “The return on GOOG’s prior investments (Mobile, Display) have been very good, but the return on GOOG’s new investments (Social, Commerce, Local, and now, in a BIG way, Mobile) are still uncertain — and the social investments ARE catch-up defensive; 2) cost structure still not ‘under control’; and 3) increasing regulatory risk.”

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There’s a lot of attention and PR around Marissa, but their product lineup just kind of blows.

— Om Malik on Bloomberg TV, talking about Yahoo, the September issue of Vogue Magazine, and our overdependence on Google