QUOTE AND NEWS
Forbes  1 hr ago  Comment 
By the end of this weekend, Tumblr founder David Karp will most likely be $250 million richer and Yahoo founder Marissa Mayer will be able to say she outmaneuvered her old friends at Google, not to mention Facebook, Twitter and Microsoft.
TechCrunch  May 18  Comment 
Sources close to acquisition talks between Yahoo and Tumblr say the blogging platform feels that Yahoo's $1.1 billion offer is "too low" and views it as "only a first offer." Yahoo may have to significantly increase the offer to close the deal. An...
Reuters  May 18  Comment 
Yahoo Inc's board will meet on Sunday to vote on whether to offer $1.1 billion in cash for New York-based blogging service Tumblr, tech blog AllThingsD cited sources...
TechCrunch  May 17  Comment 
On Monday, it seems that we may get a better sense of what Yahoo plans to build in the wake of its acquisition spree, as CNBC is reporting that the company will be holding a "product-related" news event on Monday in New York City. Marissa Mayer...
TechCrunch  May 17  Comment 
Earlier this week we reported on how Backupify was closing down TweetBackup, a free service to back up your Twitter account that it acquired in 2010; now we have confirmed that, as we'd heard, this is part of a bigger plan at the company to phase...
StreetInsider.com  May 17  Comment 
* Shareholders of Yahoo, Inc. (Nasdaq: YHOO) are taking in stride reports the company is in talks to acquire Tumblr for $1 billion. The move by Yahoo is an apparent attempt to get "cool again," AllThingD reported, especially with the...
Forbes  May 17  Comment 
When Marisssa Mayer took the CEO job at Yahoo, the consensus -- and I shared this belief -- was that she instantly made Yahoo relevant again. In the subsequent 10 months, much has vindicated that assessment as the stock has risen 70 percent,...
MarketWatch  May 17  Comment 
Yahoo Inc. is reportedly in talks with Tumblr to acquire the social blogging website for as much as $1 billion, Adweek reported late Thursday, citing several sources familiar with the discussions. Tumblr is among the major social networking...




 

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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