Yahoo! Inc. (YHOO): Declining Ad Revenue, Mobile Opportunities & More

These projects mainly included Google Glass, driverless cars, and the high-speed Google Inc (NASDAQ:GOOG) Fiber Internet and TV service. Further, the Motorola business still continues to be a turnaround business. It posted an operating loss of $179 million in the recent quarter. But, despite these few negatives, Google Inc (NASDAQ:GOOG) still remains a pretty safe bet and would be ideal for an investor looking for a safe and tried and tested investment.

Another competitor, Baidu.com, Inc. (ADR) (NASDAQ:BIDU), has an established presence in its domestic market and is strong competition for Yahoo! Inc. (NASDAQ:YHOO) in its regional market. Baidu.com, Inc. (ADR) (NASDAQ:BIDU), which is commonly known as China’s Google, holds a market share of 80% in the country. The company recently reported weak first-quarter results as it faced rising costs due to increasing competition from Qihoo 360.

Qihoo 360 has been slowly increasing its market share and now currently holds 12.5% of the market. To boost growth and combat competition, Baidu.com, Inc. (ADR) (NASDAQ:BIDU) is spending more money on mobile technology. Its research and development expenses increased 83% from last year. Further, it posted its slowest quarterly profit due to increasing traffic acquisition costs.

Actual revenue and EPS of $961 million and $0.95, respectively, missed consensus estimates of $969 million and $1.03 per share. However, although Baidu is much riskier than Google and Yahoo!, it has very strong opportunities for growth. It has a lot of headroom because of China’s huge population and relatively smaller Internet penetration.

Conclusion

Yahoo! Inc. (NASDAQ:YHOO) is on the path of a turnaround with a new management in which investors can finally believe. Ms. Mayer’s approach seems appropriate for the long run, but these changes may look messy over the next few quarters. Further, the company understands its growing opportunities in the mobile space, and as a result, it has made weaving Yahoo! services around mobile devices as a central part of its turnaround strategy. It also plans to work alongside companies like Apple Inc. (NASDAQ:AAPL) and Facebook Inc (NASDAQ:FB) to broaden its reach.

The company’s share price may face a few bumps as the company treads along the turnaround path. But, at the same time, it will provide strong returns in the long-term once the company recovers.

The article Turnaround Story Equals Strong Long-Term Investment in This Stock originally appeared on Fool.com and is written by Shas Dey.

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