QUOTE AND NEWS
New York Times  32 min ago  Comment 
Our top 10 comments of the week: Readers discuss the Democratic convention, the acquittals in Freddie Gray’s death and Yahoo’s sale. And yes, Donald Trump.
New York Times  32 min ago  Comment 
In amassing Yahoo, AOL and other online services, Verizon is preparing for the day when its most important clients are advertisers, not users.
Clusterstock  2 hrs ago  Comment 
Here are the top business stories of the past seven days. The US economy grew by less than expected in the second quarter, according to an advance estimate released Friday.  But underneath the bad headline is the real story of what's going on...
New York Times  Jul 29  Comment 
The internet giant’s decision to sell its business is plagued with challenges that reveal how unusual deal structures can affect shareholders.
TechCrunch  Jul 29  Comment 
 Yahoo finally found a buyer, Mobileye and Tesla broke up, and some of the largest tech companies reported quarterly earnings. These are the biggest tech stories of the week. Read More
The Economic Times  Jul 29  Comment 
Yahoo has introduced the upgraded messenger app for Windows and Mac after the launch in December last year. The new platform allows users to send photos and animated GIFs, the company said.
Motley Fool  Jul 28  Comment 
These three companies are selling on the cheap, but I'd still suggest that investors stay away.
Clusterstock  Jul 28  Comment 
July 18 was a big day at Yahoo: It announced its second-quarter earnings and took the final bids for the auction of its core business, which eventually sold to Verizon. But it appears that day marked the start of a new trend at Yahoo as well —...
Yahoo  Jul 28  Comment 
Yahoo Finance is tracking the stocks you’re following, based on your Yahoo Finance ticker searches.




 

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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