Yahoo! Inc. (YHOO) Will Weather the Storm

Page 1 of 2

Turbulent waves call for skilled, resilient captains.  Marissa Mayer is one such captain.

Since taking the top spot at Yahoo! Inc. (NASDAQ:YHOO) in July, Mayer has implemented a number of structural changes to Yahoo’s business models and culture. Here are a number of the positives.

Mayer Makes Ground

  • Mayer pulled a page out of Google Inc (NASDAQ:GOOG)’s playbook and increased employee perks to foster a better environment.  (Think free cafeteria food.)
  • Since taking office, Yahoo has improved its content properties like Yahoo Mail and Flickr.
  • Yahoo “acqui-hires,” meaning the company bought smaller companies for their developer talent, as well as for their products.
  • Yahoo’s search revenue, powered by Microsoft Corporation (NASDAQ:MSFT)’s Bing search engine, increased 14% year-over-year, excluding commission payouts.
  • Revenue for the most recent quarter increased 2% year-over-year.

There’s More in the Hopper

And a lot more changes are one the way.  For example, Mayer is positioning Yahoo to take on more business from mobile traffic.  In aggregate, Yahoo content sites currently get above 200 million unique mobile visitors per month.  Mayer agrees that mobile is a “nascent source of revenue,” but she is prepping the company to develop new tools to improve its monetization of mobile traffic.  I believe that in the future, this will prove to have been a wise investment.

Moreover, Mayer plans to continually customize its content for people, based on where they live, what they like, and their background.  Think customized Google search and highly-relevant advertisement and product recommendations.  Also, I believe that Yahoo will get better at customizing for user preferences if it is able to grow users of its e-mail service, and especially if it launches a browser that can gain considerable traction.

Finally, Mayer plans to continually launch “smart partnerships.”  For example, Yahoo provides certain data for Apple Inc. (NASDAQ:AAPL)’s Siri service on iPhone.  I think that smart affiliations like the Apple partnership will go a long way toward increasing Yahoo’s distribution.  Now that we know the good, here’s the bad.

Continual Erosion

Despite the gains, Yahoo still faces a host of obstacles.  For example, Yahoo’s display ad revenue – its core business – dropped 5% year-over-year.  This includes sales from video, interactive, and graphical ads.

Also, I believe that people are “trained” to use Google’s search algorithm.  Venture capitalist Bill Gurley wrote an interesting post on this topic, where he only used Microsoft’s Bing search engine for an entire two months.  I recommend taking a look at his short post, called “My Life with Bing.”  His experience is insightful and explains Google’s embedded competitive advantage in search.  However, at the end of the day, many argue that Yahoo’s and Bing’s search is just as good (if not better) than Google’s – but it all comes down to what people are used to using.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

6 Ways to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

The 10 Best Cities to Find Jobs in 2014

The 10 Most Controversial Songs Of All Time to Hit (and get Banned from) the Airwaves

The 20 Biggest IPOs in US History

The 10 Best Places to Visit in Mexico that Are Beautiful and Safe

7 Bad Habits that Age You Beyond Your Years

The 40 Best Fortune Cookie Sayings That Will Leave You Bemused, Befuddled, or Beguiled

10 Foods to Eat Before a Workout to Make Every Drop of Sweat Count

The 5 Best Documentaries On Netflix You Must See

The Most Heartwarming and Inspirational Story Of This Halloween Season, It Will Make You Cry and Jump For Joy

10 Best Party Songs of All Time to Bring the House Down With

5 New World Order Conspiracy Theories that Will Strangle the World

The 10 Highest Rated Movies of 2014

The 10 Largest Container Shipping Companies in the World

The 10 Largest Armies in the World: Who Should We Be Afraid Of?

Best Warren Buffett Quotes on Money You Need to Hear

The 10 Highest Suicide Rates by Profession

The 20 Most Underrated Movies of All Time

The 10 Fastest Growing Companies in America

The 10 Biggest Outlet Malls in USA

The 5 Most Popular Rap Songs of All Time

The 10 Countries that Eat the Most Meat

The10 Most Expensive Countries to Fly To

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!