Yahoo! Inc. (YHOO) Will Weather the Storm

Another issue is that advertising agency executives are honing in on Google’s and Facebook Inc (NASDAQ:FB)’s ad platforms.  Google’s traffic is clearly tops.  But executives are also taking a compelling interest in Facebook.  The reason is because Facebook allows advertisers to run ads for Facebook pages that show a person’s “friends” who also ‘like’ the page.  The new friend-to-friend recommendation of products and services is a compelling proposition.

Moreover, Facebook is increasingly blurring the lines between itself and the other search giants.  Facebook now allows users to search for information on timelines, meaning that it can now compete directly with Yahoo, Microsoft, and Google.

Finally, notice the right side of this chart.  Yahoo’s market share is falling.

On one side, the drop looks terrible.  But on the other, Facebook is now in the search mix, stealing traffic away – which makes things look less bad for Yahoo.

The Bottom Line

Yahoo’s CEO Marissa Mayer is doing a fine job of repositioning Yahoo to provide more useful, customized products for its customers and content consumers.  I don’t doubt her ability one bit.

The problem is that Yahoo is in an incredibly competitive business, and it is hard for any company to gain a long-lasting competitive advantage.  Any shortcomings aren’t necessarily a product of Mayer, but rather of the increasingly competitive market of search.  Thus even while Mayer “Steadies the Ship” and steers Yahoo toward a more prosperous future, Yahoo’s core businesses continue to slip.  This doesn’t make Yahoo a terrible company – it just means that Mayer needs more time to “weather the storm.”

The article This Stock Will Weather the Storm originally appeared on Fool.com and is written by Chris Marasco.

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