A “Flickr” of Hope for Yahoo! Inc. (YHOO)

Ever since Marissa Mayer took the helm as CEO at Yahoo! Inc. (NASDAQ:YHOO) in the summer of 2012, things have been going quite well at the Sunnyvale, California media portal.  The company’s stock has appreciated from around $16 to $20 since Mayer came in, and it seems that Mayer is doing a lot of things right in her quest to turn the fortunes of Yahoo! around.

In order to compete better with Facebook Inc (NASDAQ:FB)’s photo sharing service Instagram, Yahoo! has updated its own photo sharing service, Flickr.  Yahoo! has also given a facelift to its homepage, which has resulted in a newer, chic look.  Do these new updates, as well as other preceding developments at Yahoo!, indicate that a “Yahoo! Renaissance” is imminent, or will Yahoo! stay in the cycle of mediocrity that it has been in for the past few years?  The new policies at Yahoo! provide a great opportunity for investors, and the long-term prospects for Yahoo! are certainly improving even though there is still much work to be done.

How Instagram and Google Factor in to Flickr’s Success

The Dec. 19, 2012 article entitled “Why Instagram Will Make Facebook Bundles of Money” discussed the reasons why Instagram would turn out to be a profitable acquisition for Facebook.  It also analyzed competitors such as Yahoo!’s Flickr and Google Inc (NASDAQ:GOOG). The analysis in this article came before Instagram’s massive privacy policy uproar and Instagram’s most recent refusal to develop an app for the new BlackBerry 10 line of smartphones.

Although Instagram will most likely turn out to be a good move on Facebook’s part, the photo-sharing business has some legitimate competition from Yahoo! Inc. (NASDAQ:YHOO) and Google.  Below is an observation from the December article that is pertinent to the current topic at hand:

“The success of Instagram has given investors a “snapshot” into the current state of the tech industry.  Mobile usage of the internet is fast outpacing desktops and laptops and is opening up a new frontier for tech companies.  Facebook’s acquisition of Instagram is an important step for Facebook moving forward.”

Instagram’s usage is skyrocketing, and when Facebook finds a way to monetize that usage Instagram will bring in a lot of revenue.  Instagram is the largest player in this market and their competitors have yet to make major inroads into the massive potential of the photo sharing market.   However, Facebook needs to keep its eye on Yahoo! and Google and continue to balance the happiness of Instagram’s users with the need to generate revenue.

Yahoo! and Google now have an opportunity to grab some disenfranchised Instagram users, as well as stake claims in the Research In Motion Ltd (NASDAQ:BBRY) market, which should be a cause for concern for Facebook.  However, Instagram is still a big power player in the photo-sharing market, and Yahoo! definitely has an uphill battle to fight in seeking to grab some market share.

Google is another important factor in the success of Flickr.  Google’s social network Google+ has become a hub for photographers and has certainly demonstrated that it is not afraid to throw its weight around.  Facebook and Google appear to be the two “big boys” duking it out for dominance in the photo-sharing market, while Yahoo! is a smaller, outlying company trying to gain traction.  As long as Google continues to sharpen and improve its own photo-sharing software, Yahoo!’s Flickr has another battlefront to fight on in addition to Facebook’s Instagram.

Yahoo!’s Flickr service is a project which CEO Marissa Mayer has pledged to continue working on, even though Mayer recently announced she would slash up to 80% of Yahoo’!s current mobile apps.  One of Yahoo!’s major goals under Mayer is to improve its mobile apps, and the Feb. 21, 2013 Flickr update is just one example of that plan.

Will Yahoo be Competitive?

Yahoo!’s revamped homepage will most likely help the company bring in more revenue, and so far the “reboot” seems to be doing pretty well.  Can Yahoo! continue to produce results, or are the most recent results simply a fluke or a “honeymoon period” after the hiring of Mayer?

Yahoo! is a smaller company than Facebook and Google–frankly, Facebook and Google are two large Goliaths in comparison to the Davidic Yahoo!. The fundamental question is will Yahoo! be able to overcome the Goliaths?  Time will tell if Yahoo!’s current performance is an indicator of future growth or not.  Yahoo! needs to sustain user interest by giving users a reason to come back to the website, as well as continuing to develop its mobile apps and other branch operations.  The turnaround story at Yahoo! will continue to take time.  One should not expect a radical complete overhaul of a Fortune 500 company in the space of less than a year.  Yahoo! has certainly had a bad track record of missing major opportunities to buy Facebook, Google, and Yelp Inc (NYSE:YELP), but perhaps other acquisitions Yahoo! has made will bear fruit later.

Conclusion

Facebook’s Instagram will most likely remain a powerful force in the photo-sharing industry.  But Facebook definitely needs to keep an eye out for a revitalized Yahoo! and the guns-a-blazin’ Google.  Although Yahoo! has a long road ahead of it, CEO Marissa Mayer is certainly making the right moves in order to, hopefully, be more competitive with Facebook and Google.

The article A “Flickr” of Hope for Yahoo! originally appeared on Fool.com and is written by Evan Buck.

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