Goldman Sachs said it will keep Yahoo! (YHOO ) on its recommended list for long-term investors, but lowered its outlook on the Internet media company, noting that there will be near term weakness in the stock as investors calibrate new risks and rewards.
Analyst Michael Parekh says Yahoo! is in a period that is very similar to the period that the Internet service provider America Online was in at the end of 1996 when AOL began its transition from metered to unlimited access. While there was near term pain for AOL, its model prevailed as the company benefited from significant scale and leverage to grow advertising.
By that logic, Yahoo! will be able to improve its global platform with numerous initiatives underway over next few quarters, he says.