Yahoo! (YHOO)

Yahoo! has strong holdings in Asia, where brand recognition is very important. Using a combination of joint venture/partnerships and direct market penetration, Yahoo has established a meaningful presence for itself in China, Korea, and Japan. With the rise of Internet use and familiarity in Asia, Yahoo! is poised to do well in a new and rapidly expanding market.

In the short term, we are going to see Steve Ballmer, CEO of Microsoft, coming back to Yahoo for a bid for the search business line of Yahoo! or for some kind of partnership. As Mr. Ballmer said at a conference in October, a combination with Yahoo was a logic outcome for Microsoft's future. Now, the only uncertainty is when that bid or partnership is going to happen. As the pressure is on Jerry Yang, CEO of Yahoo, who needs to find a solution to the sliding stock of the company since May 2008, due to stagnating revenues released on the Q3 and Q2 of 2008.

Not only do Yahoo! and its affiliates have more visitors than any other site or family of sites on the Internet, it also has very high affinity metrics--users tend to spend longer at Yahoo! sites, and Yahoo! has a very high number of returning users, implying high site loyalty. These metrics translate into profit for Yahoo!, which can now bill itself as prime space for online advertising.

Yahoo and Samsung have teamed up allowing Samsung televisions to stream Yahoos connected TV platform. By the end of this year LG, Vizio and Sony will have released new sets including Yahoo TV.

YHOO launched a more than $100 million global advertising campaign touting how it can help consumers personalize their online experience. They aim to promote their new search engine which belongs to Microsoft's bing.

Observers said the campaign's success depends on whether the Internet company makes good on giving consumers a better Web experience. "It harkens to the past and is Yahoo's last stand for the future," said Dean Crutchfield, an independent branding consultant.

references

"Yahoo Sets Ad Campaign to Lure Back Web Users " from Wall Street Journal

Yahoo! owns 44% of the Alibaba Group, comprised of Taobao, Alipay, Yahoo! China, and a stake in Alibaba. Taobao is a Chinese online marketplace (like eBay) and Alipay is a third party payment platform (like PayPal). According to Taobao, the company facilitates 1.4% of all Chinese commerce currently and is growing at around 100% y/y. Alibaba is estimated to be worth around 15 billion. Per share value of $3.68 per share for Yahoo!'s Japan holdings and $3.41 for Yahoo!'s Alibaba Group. holdings. Taobao is already half the size of eBay and growing.

Along the left side of the new homepage is a feature called the applications bar. It will feature apps that users can purchase (or free ones)for their home pages. For instance twitter can run from yahoo, no need to go to twitter or leave Yahoos home page. This is a substantial revenue generator and surprised GOOG or MSFT havent implemented.

Wall Street likes Yahoo's new CFO. current CFO of semiconductor manufacturer Altera (ALTR), is an incremental positive for YHOO. BOA-MERRILL says the well-qualified Morse sets conservative expectations, which likely will be appreciated by investors hoping for a more stable Yahoo. Barclays says Morse is a well-regarded operational CFO who is expected to focus on cost controls and low-hanging fruit, of which there is much to be had. There is still room for growth. Today I sold 10 YHOO Jan10 puts at a strike price of 15 for a premium of $1,700.00. My worst case is Yahoo trades under 15 and my cost basis is 13.30.

Although Microsoft has several times declared it no longer wishes to buy Yahoo! it is not the first time Microsoft backed down to come back with another offer, and even if Microsoft only bought for around 30 dollars a share (under their original offer of 33 dollars), it would still be a reasonably high price since Yahoo! is currently only at 22.45 dollars a share.

Yahoo!'s movement into the mobile advertising/content market promises plenty of room for expansion and growth in years to come. Its partnership with OEMs and carriers allow it to reach a large user base, which it can then leverage to optimize advertising profits.

New leadership, new focus, definitely a good start to a revamping of a long held brand.

Mayers will definitely downsize the undisciplined set of services Yahoo! has and focus on a more direct user experience. This translates out to more users and investor confidence.

Its a great company with 500 million huge loyal fan base

Bartz will be focusing on the Asian assets held privately under Yahoo worth as much as 10bn, these can be spun off or completely sold since they're not seen as core holdings for Yahoo. There is no doubt that there is a very challenging task ahead for her in steering Yahoo through this difficult environment while refocusing, reorganizing and most importantly re-energizing the culture that was demoralized by Yang. Yahoo has considerable value that is locked up in a culture that for the past few years had no direction. To top this off our country is in the middle of one of the worst economic times since the great depression. While the company's initiatives will take some time to gain traction, if shareholders can align with the new management team and complete the renovation of Yahoo this company will be a strong performer for years to come.

Note: The revamped inbox which has close to 300 million users is currently being rolled in beta version and is open to third party developers to make applications available similar to the Iphone app. store. If Yahoo can be half as successful as Apple on this initiative, earnings will certainly receive a nice boost.

The Yahoo/Intel widget channel is certainly exciting as this brings the internet to your TV. Intel will be building the Yahoo widget into TV chips starting in mid 2009. This will provide viewers an onscreen internet application (email, chatting, fantasy updates) while they watch their favorite shows.

There has been strong speculation that Yahoo is being pursued by former AOL chief Jonathan Miller. The purchase price could be in the range of $20-$22 per share.

During a conf Yahoo!'s CFO highlighted that Yahoo! is not opposed to a search deal but search business is deeply intertwined with Yahoo's other online products and properties, and so any deal, whether a partnership or a sale, would be done for the right reasons and the right economics.

Microsoft's CEO mentioned about the increasing likelihood for a possible MSFT/YHOO search deal due to recent management changes at Yahoo! (new CEO), yesterday Yahoo!'s CFO essentially not only expressed Yahoo!'s interest in a search deal but also publicly set the stage for some possible negotiations with Microsoft.