QUOTE AND NEWS
Motley Fool  4 hrs ago  Comment 
The sale process is moving ahead, but it won't necessarily be quick. Here are a few of the most important points from Yahoo!’s first-quarter report.
MarketWatch  8 hrs ago  Comment 
The unprofitable social-media company generously awards senior managers, writes Phil van Doorn.
Benzinga  9 hrs ago  Comment 
The news just keeps getting worse for Twitter Inc (NYSE: TWTR) shareholders after the battered stock crashed another 15 percent on disappointing Q1 earnings. Twitter’s numbers were actually atypical this quarter, with the company reporting...
CNNMoney.com  Apr 27  Comment 
Marissa Mayer and activist hedge fund manager Jeff Smith have been locked in a bitter struggle for control of Yahoo. Now Smith is Mayer's boss. Recent podcasts: Bernie gets the Axe | Blindsided: How ISIS Shook The World | Graham Opposes GOP Leader
Clusterstock  Apr 26  Comment 
T-Mobile CEO John Legere thinks that Verizon will make a "stupid acquisition" within the next six months. Legere was not specific in his interview on CNBC on Tuesday, but he could have been referencing reports about Verizon's interest in...
Benzinga  Apr 26  Comment 
85-year old Warren Buffett and his 92-year old sidekick Charles Munger are set to host Berkshire Hathaway Inc. (NYSE: BRK-A)'s annual shareholder meeting on April 30. For the first time ever, a live stream of the shareholder meeting will be...
Motley Fool  Apr 26  Comment 
A distribution cut and weak outlook are weighing heavily on the shipping MLP today.
Financial Times  Apr 26  Comment 
US telecoms group wants to offer an alternative to Google and Facebook but some are sceptical
Yahoo  Apr 25  Comment 
Stocks traded in range today as the biggest week of earnings is upon us. And we have another all-important Fed meeting. Catch the Final Round with Jen Rogers and Yahoo Finance Editor-in-Chief Andy Serwer.




 

Yahoo! Inc. (Nasdaq: YHOO) is a global internet services company that operates the Yahoo! Internet portal. It provides varied products and content, from email and search to media streaming and downloads. Its main revenue sources come from advertising and marketing services. In fiscal year 2010, Yahoo reported revenues of $6.3 billion and net income of $1.2 billion. While Yahoo's main presence is in the United States, its well-established name and solid partnerships in Asia make international expansion a promising opportunity for the company. In response to the fast growing mobile advertising market, Yahoo has been actively pursuing partnerships with carriers and original equipment manufacturers in the mobile industry, as well as tailoring their existing marketing services to mobile users.

Company Overview

Founded as a web directory by two Stanford graduates in 1994, Yahoo! had become a dominant player in the field of Internet services although its competitive position has since become eclipsed by Google and others. The company had experienced healthy growth in top-line revenue year over year for the last four years, but net income has fallen year-over-year due to increased costs of doing business in the increasingly competitive sphere of internet advertising. Specifically, Yahoo!'s year over year cost of revenue is increasing faster than their revenue growth.

Trends and Forces

Increase in Online Advertising

Advertising spending continues to show a disproportionate skew in favor of newspaper, TV and direct mail. However, the Internet channel has grown at approximately 18% per year--faster than any other channel--taking share from stagnant channels such as newspaper, which has been flat over the same time period. Continued growth in quality and availability of Internet access means that the Internet services sector--particularly Internet advertising--will remain lucrative for some time to come. An increasingly pronounced trend of replacing print directories and classifieds with virtual alternatives will also create a push for online search use as well as increase demand for online classifieds.

Online Video Advertising Growth

Video advertising promises to be a particularly lucrative area of rapid growth in the online advertising sector as online video viewership continues to rise. In research released by comScore, data shows that 175 million U.S. Internet users watched online video content in October for an average of 15.1 hours per viewer.[1]. In terms of video property and viewership, Yahoo ranked second with 53.8 million viewers, behind Google Sites's 146.3 million unique viewers and ahead of Viacom Digital, VEVO, and Facebook[1].

  • Branded vs. Search Advertising

Branded advertising is often image-based and usually priced on an "impressions" basis--the more times it shows up, the more the advertiser pays. Search advertisements are primarily text-based and usually rely on click-through; the more times a particular link is clicked, the more Yahoo! is paid. Together, the two constitute a good balance of different kinds of online advertising. However, branded advertising tends to depend very heavily on the economic situation of the brands in question.

  • Mobile Advertising

Mobile advertising is in its nascent stages and is currently growing at more than 20% per year, making it a powerful source of potential growth for Yahoo! On its end, the company has been actively pursuing partnerships with carriers and original equipment manufacturers in the mobile industry, as well as tailoring their existing marketing services to mobile users.[2]

Competition

  • Google is Yahoo!'s biggest competitor in search advertising. Google's acquisition of popular video site YouTube put it directly against Yahoo! in media streaming, and the two already have a long-standing rivalry over search-based online advertising. Yahoo! has lost significant search market share to Google. In 2009, Google made headlines by overtaking Yahoo! in unique users per month. However, Yahoo! recently released a next-generation online advertising platform system called Panama. Their system will in theory optimize advertising profits by increasing the average revenue per search click and has returned modestly successful results so far. Yahoo!'s recent acquisitions of RightMedia and BlueLithium further solidifies its position in display advertising. Finally, Yahoo!'s perceived role as a community-based entertainment site may also give it a slight edge over Google in entertainment-based advertising. However, Google's MySpace-YouTube advertising alliance may be poised to challenge the company.
  • Microsoft, with the introduction of Windows Live and adCenter, Microsoft is also a growing threat. Microsoft's acquisition of LiveJournal gives it a significant foothold in the webblog scene, and along with Google, it has been steadily gaining ground against Yahoo! in the European Internet services market. However, by itself Microsoft remains less a threat than Google.
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