It seems that Yahoo! Inc. (NASDAQ:YHOO) is aggressively implementing its revamped takeover strategies. Since CEO Marissa Mayer took over in mid-2012, the company has seen some interesting buyout deals become successful, though they are smaller in terms of amount.
The latest addition to the list of acquisitions is the content reading app, Summly, which was developed by 17-year-old Nick D’Aloisio. With this new $30 million deal, the tech giant has completed five acquisitions since January 2013, equaling the total number of combined successful deals in 2011 and 2012.
Expansion strategy or image makeover?
It is perceived that Yahoo! wants to use Nick D’Aloisio as a tool for its image makeover. CEO Mayer wants to prove a point to investors and customers that the company will no longer sit back and observe its competitors overtaking it. Rather, it is on a new mission towards growth and expansion.
After the deal was announced, the statement from Yahoo! read, “Nick will be a great person to put in front of the media and consumers with Mayer to make Yahoo! Inc. (NASDAQ:YHOO) seem like it is a place that loves both entrepreneurs and mobile experiences, which in turn will presumably attract others like him.”
Apart from showing its might on the acquisition front, Yahoo! has taken several other steps that indicate it is desperate to taste success after being in the sidelines for a while. It has switched to iPhones from BlackBerries for its staff, brought on board brilliant minds that founded start-ups, and facilitated the company’s cafeterias with free food for employees.
The internet giant has been busy reworking its online news and media strategies such as home page renovation, bottomless page, email app, and endless news stream. And, now it is working even harder on the digital content aspect, especially after purchasing Summly.
What is significant about Summly?
The utility of mobile devices has constantly been changing in our lives. The mindset of users has changed from “what else can be done” using mobile devices to “how much can be done”. They are keen to know how much information can be gathered in lesser time. In this way, the latest bid of Yahoo! to buy Summly has been a calculated move to comply with the changing trends in technology.
Until now, most of the online content and pages were designed in a manner to suit browsing with mouse. And there was a need to develop technologies so that the content could be skimmed through using smartphones and tablets. Summly brought a revolution in this segment, coming up with snapshots of news stories, thus giving a simple approach to read the news at an ultra-fast speed.
Yahoo! Inc. (NASDAQ:YHOO) has revealed that it will abandon the existing Summly app and mix it up with the company’s content processing tools already in use across verticals, especially in mobile applications.
The response of Yahoo!’s competitors is to be seen in coming times. But at this moment, the company is sending out a strong signal that it has the same crave for expansion and diversification in the online content space as Google Inc (NASDAQ:GOOG) and Facebook Inc (NASDAQ:FB) possess.
Marissa Mayer’s efforts in 2012 have been strengthening Yahoo!’s position in the digital content space, and the internet giant has steadily shifted its strategies toward mobile devices. Mayer’s former company, Google, is already an established name in this segment. While her ex-colleague at Google, Sheryl Sandberg, now COO at Facebook, has also shown her intent to pursue content products strategies more aggressively.
Google and Facebook, who have eclipsed Yahoo! by some distance in the mobile content sphere, will leave no stone unturned to counter Yahoo!’s refurbished strategies. But, Yahoo! has one advantage over others, especially over Google, in the form of Marissa Mayer, who used to take care of Google’s user experience and search products strategies as its Vice President. She is in a better position to guess Google’s move as she knows the firm inside out.
Nonetheless, it remains a hypothetical question whether or not Yahoo! Inc. (NASDAQ:YHOO) succeeds in challenging Google’s dominance in the near future. But, at this moment, nobody can deny the fact that Google is among one of those tech companies equipped with facilities which will see the company grow even faster. With an employee base of around 54,000 and the market capitalization of $266 billion, the internet giant is looking all set to continue its dominance in the IT segment.
On the other hand, Facebook has to play all tricks to retain its one billion users to keep using the social networking platform on a regular basis, which seems a daunting task from a long-term perspective. On the innovation front, the social media giant has been developing innovative products like graph search and others. Overall, Facebook has got complete control over its acts, at least this point of time.
From a strategic point of view, the Summly deal seems to be an extraordinary move by the company. In fact, it might prove to be the most prudent $30 million deal made in the last few years by any tech firm in the Silicon Valley. CEO Mayer is too much focused on developing solutions for smartphones and tablets so that content browsing can be simplified.
Yahoo is expected to continue acquiring start-ups and add to its core values. It remains cautious on going for research and development on its own, considering it a waste of money. It is to be seen how this move helps the firm in its bid to turnaround; but from the financial standpoint, it will certainly boost its health. Keeping in view the latest developments and its future course of actions, investors can look at it from the long-term perspective.
Jeremiah Feliciano has no position in any stocks mentioned. The Motley Fool recommends Facebook and Google. The Motley Fool owns shares of Facebook and Google.