Skip to main content

Yahoo reveals a strategy for incremental change

It's 100+ days and Yahoo (YHOO) has finally revealed its new strategy. They are not "blowing up" the company; it is more like they are going to mold it into something better. This is an incremental approach not a radical one.

There are three main points presented by CEO Jerry Yang. These are Yahoo's objectives going forward:
  • Become the starting point for the most consumers on the Internet
  • Establish Yahoo! as the must buy for the most advertisers
  • Deliver industry leading platforms that attract the most developers
Let's take them one by one and look a little closer.

Become the starting point for the most consumers on the Internet -- Yahoo's strength has always been their content and management recognizes this. The focus on content in order to drive traffic is a logical extension of current strategy. Mail, the Yahoo homepage, MyYahoo, all generate millions of pageviews per day. Yahoo Finance, Sports, and News are known leaders in their categories. Yahoo has been lagging in social networking though they point to Flickr and Yahoo Answers as successes. They are committing to do more in this area though they did not indicate any new acquisitions that might accomplish that goal (ie, Facebook). Mobile was also mentioned as a channel that will not be neglected. Yahoo intends to stay clearly focused on the main goal of being the Internet starting point for consumers and shut down or stop funding initiatives that do not support that goal. Doing what it takes to keep Yahoo's high level of traffic and increase it makes sense and feeds directly into the next objective.

Establish Yahoo! as the must buy for the most advertisers -- top content and high levels of traffic are naturally attractive to advertisers. Yahoo, however, is not limiting itself to its own properties. It is also emphasizing partnerships with leading sites and using its acquisitions in Right Media and Blue Lithium to extend their ad network and provide superior targeting. This quarter's numbers confirm that display ads continue to command a significant part of ad spending and that plays to Yahoo's strengths. The company contends that the Panama upgrade to their search engine is bearing fruit (the numbers on Revenue per Search quoted in their earnings call seem to support this) and that the international roll out will soon be complete. Realistically speaking, they seem to believe they can be a strong second in the search advertising segment. They are clearly not entertaining any idea of outsourcing search to Google. The company feels that maintaining their own search functionality makes them a more complete advertising platform that can offer many channels in an integrated manner to meet advertiser needs.

Deliver industry leading platforms that attract the most developers -- I have written about this before and discussed how opening systems to outside developers allows unexpected applications, plug-ins or widgets to be created that may go viral and, being based on Yahoo functionality, can provide a benefit to Yahoo as well as the developer. Yahoo believes this to be true and is committing to making this easier. This is the same strategy that Facebook has announced and which has generated a great deal of Internet buzz. Yahoo had already been doing this for quite a while (Pipes, opening the API to Mail, offering their Javascript libraries for creating interactive web pages) but it hadn't generated as much momentum. There will now be a focus on designing open systems, enlisting independent developers and not relying solely on internal development staff.

In summary, it sounds like Yahoo wants to emphasize what's working, phase out what isn't necessary, craft a compelling end-to-end solution for advertisers and reinvigorate the technology-based soul of the company. Yahoo has reorganized divisions and shuffled management to more clearly focus on its new goals. Preliminary results as discussed in this week's earnings call indicate the strategy has potential. If Yahoo can continue to execute on this strategy, there is no reason why they can't be successful. After all, not every Internet company needs to look like Google.

Resources: Yahoo Q3 2007 Earnings Call Transcript on Seeking Alpha

Full disclosure: author owns no shares of YHOO

Comments

Popular posts from this blog

Unlock Stock Market Profits - Key #1

This is the first in an ongoing series of articles where I discuss what I feel are keys to successful investing. It is based on a post that provides a summary of the ten keys that individual investors should use to identify profitable stock trades. (Click here to read the original post)

There are two basic steps to investing. First, you need to find stocks that seem to have some potential. Then you have to determine whether these stocks are actually good investments. There are many stocks that at first glance look interesting, but further research reveals that there are too many negatives to warrant taking a position.

This first post in the series starts at the beginning: getting good investment ideas.

Key #1: If something special is happening to a stock, it will be reflected in some kind of unusual activity in the markets.

As individual investors, we will never be the first to know; however, unusual activity can be an early sign that allows us to follow the Wall Street professionals and …

Unlock Stock Market Profits - Key #4

This is the fourth article in a series of posts describing 10 tools to help you identify and evaluate good investing ideas. It is based on a post that provides a summary of the ten keys that individual investors should use to identify profitable stock trades. (Click here to read the original post)

With this fourth post, we will continue another step along the path of finding stocks that seem to have some potential. The first post in the series discussed how to use unusual activity to identify investing ideas. The second post described how to use stock screeners. The third post described how to use lists of new highs and new lows. This post will focus on identifying social or business trends in order to find investing ideas.

Information on new trends might turn up anywhere. In conversation with friends or business associates, in newspapers or magazines, on TV or though your work. The key is to be aware of trends and how they start, stop or change. We'll start by describing what to lo…

Free stock alerts, Trend Leaders, Bollinger Band Breakouts and Cash Flow Kings for Jan 16, 2009

This post is to announce that the latest list of free stock alerts is up and available at Alert HQ. Each week we scan over 7400 stocks and ETFs looking for fresh BUY and SELL signals. We apply a combination of proprietary and standard technical analysis techniques to identify those stocks that are beginning to move. Our goal is to identify stocks or ETFs that are undergoing reversals, either to the upside or to the downside.

Wait, there's more...

We also use the Alert HQ process to generate more free lists of stocks and ETFs

The first byproduct of the Alert HQ process is the Trend Leaders list, our collection of stocks in strong up-trends. These stocks are registering strong signals using Aroon analysis, DMI and MACD. They are also above their 50-day exponential moving average. This week's list is now available at the TradeRadar site on the Trend Leaders page.

As another byproduct of the Alert HQ process we have generated a list of stocks that have broken either above their upper…