The Search Ends Here: Yahoo! Inc. (YHOO), Facebook Inc (FB), Google Inc (GOOG)

I have never used the Yahoo! Inc. (NASDAQ:YHOO) search engine as I always preferred the uncluttered Google Inc (NASDAQ:GOOG). That doesn’t mean I don’t like the stock though. Yahoo! has been doing well for the past few months and suddenly has started to look good.

The Reasons

Yahoo! said it will be using Google’s AdSense and AdMob services to augment revenue from the content on its pages. “By adding Google to our list of world-class contextual ads partner, we’ll be able to expand our network, which means we can serve users with ads that are even more meaningful,” Yahoo! said in a blog. This partnership could help Yahoo! boost revenue from its pages.

In another move, Yahoo! has announced its alliance with NBC Sports Group to share content among them as well as promote each other on television and the internet. The collaboration will help Yahoo! to access NBC’s video content and live sports coverage. This would help Yahoo! improve its audience size and increase traffic.

The company’s balance sheet also looks good. It has $8.41 billion in cash and a very low debt load of $126 million. With that amount of extra cash, Yahoo! could repurchase shares or invest in services that will help the company perform better like developing mobile apps to increase traffic.

The numbers for the fourth quarter were better than expectations. For the first time in 4 years, Yahoo! has reported increases in revenue. Revenue for Q4 was $1.35 billion, up 2% YoY. Earnings were $0.32 per share, 28% higher than previous year’s quarter of $0.24.

The company has no exposure in the growing mobile space. No operating system, or hardware, or apps for that matter. The company has very good viewership on its sports and finance portals. I believe it’s still not too late for Yahoo! to create and come out with a mobile application to meet the needs of relevant users. This could benefit the company immensely.

Another Search

2012 has been pretty good for Google. One of the major sources of income for Google is through online advertisements. For the year ended 2012, the company managed to make around $13 billion from online advertisements which are roughly 41% of the total ad revenues while Yahoo! and Facebook Inc (NASDAQ:FB) managed to make 8.4% and 5.8% respectively. Google is trying to push up its revenue from mobile advertising as people are becoming more reliant on their smartphones and tablets for their communication needs.