I was intrigued when Yahoo (YHOO) named Marissa Mayer CEO a few weeks ago – I think thats a real ‘out of the box’ pick that few companies would do. It seems most CEO hires are retreads of the same people. So I got to wondering what Yahoo is up to. I hadn’t given Yahoo much thought over the last several years, seemed like kind of a dying company with shrinking search share. But I happened to review their latest earnings announcement to see if I could figure out where they are going. I pulled this from their ‘Business Highlights’ section of their quarterly report:
• Fred Amoroso was named chairman of Yahoo!’s board of directors and Daniel S. Loeb, Harry J. Wilson, and Michael J. Wolf joined the Yahoo! board. • Yahoo! and Alibaba Group Holding Limited (“Alibaba”) announced a definitive agreement for a staged and comprehensive value realization plan for Yahoo!’s stake in Alibaba. The first step is the repurchase by Alibaba of up to one-half of Yahoo!’s stake, or approximately 20 percent of Alibaba’s fully-diluted shares.
• In July 2012, Yahoo! and Facebook announced definitive agreements that launch a new advertising partnership, extend and expand distribution arrangements, and settle all pending patent claims between the companies.
• Yahoo! launched Axis, a new experience that re-imagines how consumers search and browse on the web. Axis offers the only search experience that allows consumers to enter their search, see and interact with visual results, all without ever leaving the page they are on. Axis seamlessly integrates with consumers’ favorite desktop browser and automatically connects the online experiences across multiple devices.
• Yahoo! launched Genome from Yahoo!, an online advertising solution that combines Yahoo! data with interclick’s third party data and advertisers’ first party data along with a premium media footprint to provide marketers with one of the most complete, custom audience solutions in the industry.
• Yahoo! and CNBC announced a strategic content, programming and distribution alliance that will dramatically expand CNBC’s online reach and presence and provide a broadcast platform for Yahoo! Finance’s original content and contributors. CNBC becomes the premier content source for Yahoo! Finance in the U.S. and later this year, the two companies plan to co-create a new slate of co-branded, original videos which will appear on Yahoo! Finance and CNBC.com.
•Yahoo! and Clear Channel announced a cross-platform content distribution and promotion agreement. The multi-faceted relationship involves the distribution and cross-promotion of premium content in addition to a live concert series to the unparalleled combined audience of the Yahoo! Media Network and Clear Channel Media and Entertainment U.S. listeners across 150 markets, plus their websites and the audience of iHeartRadio, Clear Channel’s industry-leading digital radio service.
• Yahoo! and Spotify announced a global content distribution and promotion agreement that will enable Yahoo! to integrate and promote Spotify’s on demand music service on Yahoo!’s Media Network. Yahoo! will also create an app for Spotify’s platform featuring Yahoo! original entertainment content.
• Yahoo! extended its exclusive online agreement with Eurosport to host and operate the co-branded Yahoo! Eurosport site in key markets. By partnering with the #1 pan-European television sports network, Yahoo! will continue to bring exclusive, high quality sports content online to drive user engagement and provide premium content.
What jumped out at me was all their media deals they have put together. Is this where YHOO is going? To be the hub of all the online media streaming for current content? Seems like an interesting idea though it does have a lot of potential competitors. Their outgoing CEO was a media guy, so maybe he was the one that put all these media deals together. If so, Marissa Mayer probably wont be a big asset in aquiring more media content. Mayer is a product person, so it seems like their next step is to build a platform designed for media distribution – a skill that Mayer could provide.
Yahoo is currently expected to earn a little over a buck a share next year with an estimated 5 year growth of 12% (vs actual growth of 26% for the last 5 years). Its selling at $15 a share, so their doesnt seem to be a lot of optimism built into it. Even if Mayer fails to deliver anything more than the previous CEOs at Yahoo over the last few years, it seems like the upside is better than the downside. In addition, if Yahoo builds a nice content destination, they would be attractive for one of big 4 (Apple, Microsoft, Google, Amazon) as an acquisition target – they are currently starved for content.
Make no mistake – this gamble Yahoo is making could fail. But put me in the camp of liking the hire of Mayer and being bullish on the stock.