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Yelp Advised To Stop ‘Spending Like It’s 2014’

Yelp ( YELP ) stock got at least four price-target cuts Tuesday after the troubled social media site late Monday gave weak Q1 guidance, lowered its 2016 earnings outlook and surprised Wall Street by announcing that its CFO was leaving the company. Yelp stock was down more than 3% in afternoon trading in the stock market today , near 15. Yelp stock, trading at its lowest price since June 2012, is down 85% from its all-time high of 101.75 brushed in early March 2014. The company late Monday did report Q4 earnings that beat analysts’ revenue and earnings forecasts. “After its Q4 report, we continue to expect slowing user growth, higher advertising spending and rapid sales force hiring. Yelp is spending like it’s 2014,” wrote Pacific Crest Securities analyst Evan Wilson in an industry note late Monday. “We continue to postulate that the environment has changed and it’s time for Yelp to focus on profitability instead of raw growth.” The company announced that its chief financial officer, Rob Krolik, will be stepping down “in the coming months.” Yelp said it will start looking for a new CFO immediately. UBS analyst Eric Sheridan wrote in an industry note that Yelp’s earnings translated to “disappointment today and uncertainty tomorrow.” Sheridan said that “with a lower-than-expected EBITDA (earnings before interest, taxes, depreciation and amortization) guide for fiscal year 2016 and a CFO transition ahead, Yelp’s Q4 results introduced an elevated level of uncertainty around the progress and trajectory of the business.” Sheridan was sour on the company’s Q4 EBITDA miss despite a higher contribution from its higher-margin brand-advertising business. UBS cut its price target on Yelp stock to 17 from 26. Needham & Co. cut its price target on Yelp stock to 25 from 40, while Axiom Securities cut its price target to 18 from 25. Yelp is facing competition in online reviews from multiple fronts — including from Facebook ( FB ), Apple ( AAPL ), Amazon.com ( AMZN ) and Alphabet ( GOOGL )-owned Google — as other websites build or buy their own databases of user-generated reviews to attract viewers. Yelp also competes with online travel agency TripAdvisor ( TRIP ) and Priceline Group ( PCLN ), the world’s largest Web travel-service company. Thomson Reuters noted Yelp’s Q4 EBITDA as coming in light of the consensus analyst estimate: $17.54 million vs. the $21.9 million that analysts had anticipated. Yelp posted Q4 EPS ex items of 11 cents, down 40% year over year. Yelp reported that revenue rose 40% year over year to $153.7 million. That exceeded the $152.35 million that analysts polled by Thomson Reuters had wanted to see.

Microsoft Azure Gaining Vs. Amazon Cloud, Says RightScale Survey

Microsoft ’s ( MSFT ) Azure service is gaining ground vs. Amazon Web Services in public cloud computing, says a RightScale survey of small businesses and large companies. Research firm RightScale surveyed 1,060 buyers of public and private cloud computing services. Some large companies have also been interested in a hybrid cloud model — running the most important business apps on their own servers behind a private corporate firewall and accessing public infrastructure-as-a-service (IaaS) providers as needed. Amazon Web Services, part of Amazon.com ( AMZN ), is the biggest provider of IaaS, in which customers rent computer servers and data storage systems via the Internet. Microsoft competes in IaaS but is also strong in platform-as-a-service. In PaaS, cloud companies sell applications and software, including business management and database services, that run on cloud infrastructure. According to the RightScale report : “Overall, Amazon Web Services is used by 57% of survey respondents, flat from last year. Enterprise adoption of AWS grew from 50% to 56%, while adoption by smaller businesses fell slightly from 61% to 58%.” “Microsoft Azure IaaS grew strongly from 12% to 17% adoption, while Azure PaaS grew from 9% to 13%,” the report said. In private cloud deployments, RightScale said that VMware ( VMW ) is gaining traction. In public cloud, Alphabet ’s ( GOOGL ) Google lost ground, says the report.

As Apple Ad Blocking Spreads, Wired Curbs Access To Ad-Block Users

Five months after Apple ( AAPL ) opened the door to ad blocking on mobile devices, news site Wired has become the latest publication to charge users who have installed ad-blocking tools. “We know that you come to our site primarily to read our content, but it’s important to be clear that advertising is how we keep Wired going: paying the writers, editors, designers, engineers and all the other staff that works so hard to create the stories you read and watch here,” Wired told its readers in a post Monday. The publication said 20% of its traffic comes from readers who are blocking its website ads. Wired said visitors using ad blockers will not have full access to articles on its site. It said website visitors can either agree to see ads or pay about $1 a week for an ad-free subscription. Some media firms, including Comcast ( CMCSA )-owned NBC, will not allow people using ad blockers to watch videos on their sites, while the Guardian and the Washington Post are among media sites that are prodding people who use ad blockers to pay for subscriptions instead. Support for ad blocking built into Apple iOS 9 means that iPhone and iPad users can install ad-blocking services from the Apple App store. Those products give people the power to pull the plug on Web advertising, including banner ads, pop-up ads and auto-play videos. About 16% of the U.S. online population blocked Web ads during Q2 2015, according to a September study by Adobe Systems ( ADBE ) and PageFair. Ad blocking could could cost publishers $41.4 billion globally this year, up from $21.8 billion in 2015, according to that study. There Is No ‘Free’ Internet “There has never been any such thing as free Internet, as users either pay with cash or with personal data/advertising. The experience is ‘free,’ but a return is earned by using users’ personal data to generate advertising or relevant marketing,” wrote Edison Investment Research analyst Richard Windsor in an industry note Tuesday. “The problem is that virtually all users who are paying with personal data do not realize that they are actually paying for the services that they consume.” For consumers, Windsor said, being expected to pay for services they’d been getting for free “is seen as a huge price increase, rather than paying for the service in a different way. Because paying with personal data has been almost invisible to many users for many years, it has perpetuated the myth that the Internet is free,” he wrote. Windsor added that “with many legitimate and well-respected businesses that depend on advertising to make a living, the threat of having it cut off could put them out of business.” He says users will likely turn off their ad blockers without much fuss. He also said he sees “no threat to the revenues of Alphabet ( GOOGL )-owned Google, Facebook ( FB ), Twitter ( TWTR ) and so on.” On those “walled garden” sites, ads are already fashioned to look like other content on the site and are embedded in news feeds and blog pages, and they aren’t blocked. Some other analysts, though, say the rise of ad blocking could shift more ad spending to apps rather than traditional online ads, where Google dominates. Google is facing increasing search-ad competition from Microsoft ‘s ( MSFT ) Web portal Bing, Internet search engine Yahoo ( YHOO ) and e-commerce king Amazon.com ( AMZN ), which has boosted its own direct search offerings as Google moves forward with its search-based Google Shopping service. Image provided by Shutterstock .