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Friday, November 27, 2015

Some $yhoo facts

1. Improvement in mobile is evident. It is a mobile company.

(I wish)

The Yahoo App is usually a solid 3, but its pushing a 1 star thanks to removing the back-swipe. To say it does not know mobile is now disingenuous. 

2. Many of Mayer's acquisitions have been to bulster mobile. Obviously that strategy worked. Although from a finacial perspective, the acquisitions have done little. A quick look at Wikipedia suggests Yahoo did about 48 acquisitions during Mayer's rein. The major purchases (tumblr, brightroll, flurry etc) cost about $2.4B. Not a bad spend rate. 

3. Their social savvy sucks. Or at least that is the perception. Yahoo spent $1.1B on tumblr and after multiple quarters with native ads, there is little to brag about. (Facebook is more than just sponsored posts in the news stream. Its the leveraging of the graph w/Atlas and tracking sell-through that makes their offering effective and high margin.) Yahoo's gross margin decline prove the lack of effectiveness and overall strategy.

Yahoo also does not know how to leverage their original content through other social. (At least not effectively, and their content is not typically what goes viral.)

4. Yahoo still drive huge traffic and has enormous reach. (NFL broadcast of a blah game, at weird hour of the day, produced great traffic.)

(They successfully leveraged their audience to participate via a ground up transactional business, Daily Fantasy, and through nothing more than their installed audience, were able to claim the #3 slot behind Draftking and Fan Deul. While still taking ad revenue from the two leaders.)

5. The stock is completely dependent on baba. There is still a direct correlation, but since the last quarter report, BABA now has the premium.

6. Little trust in Mayer. Manager turn over and reports of hiring consultants are breaking the camel's back.

7. Finacials are not encouraging. Revenue growth is coming at a big cost, and gross margins are down. 

Gemini seemed impressive, mobile usage is nice but none of the goodness is translating to the numbers. 

8. Original content lacks new-age character. Lacks a voice and tone that would resonate with the younger generation.

9. Lacks community throughout its mobile properties. 

Yahoo has been playing catch-up to mobile, and now they need to get ahead of the curve. The things they lack are obvious. How they plan on filling the voids is what will guide their future. Will they target the audience that will make them relevant? Will they embrace a solution that embraces more than just advertising? 

Companies exist that can fill these voids with the right demographic Yahoo desperately needs.

-BuzzFeed (leverages all social platforms well, brand management, quality original content)
-SeekingAlpha (financial community)

-Motif Investing (a transactional business, leveraging the huge finacial audience)

This baba spinoff is now a side show. Tax hit or not, the core has to become relevant. Yahoo needs to spend that cash wisely. Does Mayer still have the sway to convince the acquisition of relevant companies?

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