Can Content Save Yahoo!
Bobby is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
A Yahoo! (NASDAQ: YHOO) power user predicts a prosperous 2012 for the company ahead of an April 14, 1st quarter earnings report. Yes, I am that power user, and believe it or not, there are millions more just like me that embrace Yahoo! for its content offerings. You heard that right; millions of web dwellers still stand by one of the original Internet pioneers with the funky name capped by an exclamation point.
Sure, Yahoo! has been under fire for several years now for not keeping pace with its mighty foes Google (NASDAQ: GOOG) and Facebook, yet somehow this original portal continues to tread water long enough to make investors scratch their heads. Scan the message boards for Yahoo! and you will notice that even the most diehard of Yahoo! haters are scared to short this stock. Reason being – Yahoo! always has and still to this day, possesses a pure core of authentic content and now, more than ever – content is absolutely king on the web.
Content Marketing, as a skill set, has become the buzzword in professional service firms holding its own against sexier disciplines like Social Media Marketer and Viral Video Producer. In fact, Google, like every other search engine, continues to evolve its search algorithms to give a stronger rating to authentic content over more tech-oriented tactics like Meta tags and actual coding structures. Not to get overly technical here, but search engines have realized that users are searching for the freshest, most relevant content, and if not given these options successfully – they will go somewhere else to get it.
Authentic content without too many hoops to jump through is where Yahoo! excels, which is most likely why Yahoo! Finance and Yahoo! Sports portals continue to reign supreme. Authentic content and like-minded communities power the web and Yahoo! is heavily invested in both. On the financial side – investors flock to Yahoo! Finance over related sites at Google, CNBC and others. Yahoo! has been doing this for a long time and it is most certainly the 800lb gorilla in this space, even if Google whips Yahoo! in the advertising and search engine worlds. Yahoo! Finance has amassed legions of fans that rely on this research environment that thoughtfully includes major holders, options chains, blogs, PR and more. Yahoo! Finance helped to democratize financial information and it is doing the same for sports reporting.
Yahoo! Sports continues to enlist fan-favorite journalists from leading traditional sources while snatching up other top sports networks. It’s this attention to genuine content that allowed Yahoo! Sports to break the story of the massive scandal involving the University of Miami in late 2011, based on over 100 hours of interview with former Hurricanes booster and convicted fraudster, Nevin Shapiro.
So why are we gushing over content portals here while avoiding some key revenue questions? Here’s why – content attracts eyeballs and eyeballs attract monetization opportunities. Paid search is not going to go away and Google has the power grab here. Stalking our friends on Facebook has become the new national pastime and this is not going to go away anytime soon either. But, cast your eyes beyond these insights and you quickly realize that authentic content and Yahoo!’s interconnected world might just have the most staying power over the long haul. Yahoo! becomes an interesting investment play as Facebook and Google continue to wage a social war against each other while Apple and Microsoft battle for complete ownership of your living room.
As Apple has proved to the world – innovation matters. Yahoo! used to be an innovator and there is hope that a new CEO, a board shakeup, and some cost cutting measures might shift the focus back to this concept again. Lets remember that Google is an absolute beast, yet the company has seemingly climbed to the top on the backs of others. Did Google lazily copy Internet Explorer, Yahoo! Mail and Facebook social communities in its quest for online dominance? All we can do is make educated guesses on this stuff, but the evidence is quite provocative.
Wall Street is expecting a lower profit for Yahoo! when the company reports its first quarter results on Tuesday, April 17, 2012. Analysts are expecting earnings per share of 17 cents after the company booked a profit of 19 cents a share a year earlier. Analysts are projecting earnings of 82 cents per share for the fiscal year and revenue is expected to decrease 12.7% year-over-year to $1.06 billion for the quarter. Yearly revenue is projected to come in at $4.45 billion.
While the company has reported revenue declines over the last four quarters, 18 of 27 analysts rate the stock as a hold. Many analysts have become a little more optimistic about the stock recently with several buy ratings starting to emerge over the last 3 months.
Could it be that a complete management shake-up complete with new staff reductions and new lawsuits waged against competitors is providing a light at the end of the tunnel? Maybe. At the end of the day, Yahoo! is a digital media company. Google is the major threat, yet it is not as content focused as Yahoo! and it pales in comparison when looking at the robust communities that thrive on Yahoo! properties. Another competitor includes Microsoft and I don’t think I even need to mention how far behind they are in the digital content space.
Yahoo! is hoping to use this upcoming earnings announcement to snap a string of four-straight quarters of revenue decreases while propping up some much needed renewed energy focused on a strong rebound. Can authentic content save Yahoo!? Can Yahoo! carve out a digital media niche in between search, social and online advertising? Only time will tell.
The Motley Fool has no positions in the stocks mentioned above. BobbyFisher has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.