In the last few years, Yahoo earnings have been increasingly flowing in from equity method investments primarily from Yahoo Japan and its crown jewel, Alibaba. Both these companies have an ever increasing contribution for Yahoo’s bottom line, in the wake of a weakened position in Yahoo’s search and display businesses.
Mobile, Video and Tumblr; Newer revamped products
Yahoo! Inc. (NASDAQ:YHOO) has made a number of changes to its user interface and continues to make progress in newer avenues like social and mobile to drive its fortunes. Yahoo’s page-view traffic is on the rise, after dipping in 2012, thanks to a number of changes to its user interface.
The increase in user traffic in Yahoo was because of the newer and modified versions of some of its more popular consumer properties including Search, News, Sports, Weather, Mail, Flickr, Finance etc. on desktop and on mobile. And consumers have ramped up their usage and user engagement on Yahoo’s platform. Yahoo also introduced newer ad formats on its properties to enhance its monetization efforts- on display, video etc.
On mobile, Yahoo surpassed more than 340 million monthly mobile users. Mobile is a core focus of the company, and might be a strong growth engine in the future. And if Yahoo can ramp up its mobile advertising business, the segment can grow its ad revenues on mobile. In addition, Yahoo launched newer version of the Yahoo app for iOS and Android, which drove daily users up by 55%.
On video, Yahoo is making investments to build its ad inventory. Yahoo’s video inventory gets sold out months before so the company will work on ramping up its capacity, and add more content to do so. Yahoo will be working closely with the social asset, Tumblr to ramp up monetization on Tumblr’s platform. However, Tumblr is unlikely to generate material amounts of revenue for Yahoo in 2013. Tumblr is seeing solid traction with more than 250K new blogs being created daily and more than 75 million posts each day.
Going Forward
Yahoo did notch down its guidance for Revenues, EBITDA and operating income for fiscal year, 2013 based on the company’s weak performance in the first half of the year. Yahoo! Inc. (NASDAQ:YHOO) has shut down a number of its less used consumer services, and ramped up its focus on the ones that can gain more momentum among customers
Yahoo’s management stated that the company will keep on focusing on its 4 keys growth engines to fuel its future growth, which are—search, mobile, video and display. But it might take years for Yahoo to get back on track, as the company is losing ground to faster and more dynamic Internet companies.
The article Yahoo!: Long Road to Growth originally appeared on Fool.com and is written by Ishfaque Faruk.
Ishfaque Faruk has no position in any stocks mentioned. The Motley Fool recommends Google and Yahoo!. The Motley Fool owns shares of Google and Microsoft. Ishfaque is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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