QUOTE AND NEWS
Clusterstock  Jun 16  Comment 
Since it was invented over 200 years ago, the wristwatch has been an integral component of fashion. In addition to their practical functionality of telling time, a watch serves as a collectible piece of art that communicates the personality and...
TechCrunch  Jun 16  Comment 
 This week The Europas Startup Conference and Awards once again pulled together the best startups in Europe for a day of conversation, networking and partying. The conference day is rounded out by the evening awards where the hottest startups in...
Channel News Asia  Jun 15  Comment 
Verizon Communications Inc said on Thursday it expected to incur about US$500 million in pre-tax expenses in the second quarter as a result of its US$4.48 billion purchase of Yahoo Inc's core business.
Benzinga  Jun 15  Comment 
Immediately after completing its acquisition of Yahoo! Inc. (NASDAQ: YHOO), Verizon Communications Inc. (NYSE: VZ) began trimming its expanding media portfolio. The Huffington Post, operated by Verizon subsidiary AOL, laid off 39 employees...
Cellular News  Jun 15  Comment 
NEW YORK - Verizon Communications Inc. (NYSE, Nasdaq: VZ) today completed its acquisition of the operating business of Yahoo! Inc. (Nasdaq: YHOO). Click here for more.
CNNMoney.com  Jun 14  Comment 
HuffPost and Vocativ are the latest media companies to get hit with layoffs.
Forbes  Jun 14  Comment 
Verizon announced that it has completed its $4.5 billion acquisition of Yahoo’s internet assets. Verizon will merge Yahoo’s operations with AOL, which it acquired in 2015, creating a new subsidiary called Oath that is focused on digital media,...




 

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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