Do Yahoo Investors Have Reason To Hope?

Jean-Marc is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

As understandable investor anger and frustration over recent Apple CEO Tim Cook's “we're OK” statements show, whoever leads your company is pretty darn important.

As was the case with the late Steve Jobs, this person at the helm not only reacts to market data and manages performance, but casts vision for an organization and inspires others to innovation. Those investing in said enterprise need to know, more than anything, that it’s going somewhere. Marissa Mayer, CEO of Yahoo!(NASDAQ: YHOO) shared some of those trajectory plans last weekend on Bloomberg TV.

In an interview with the World Economic Forum, Mayer, responded to questions like, how in the world they planned to compete with the “four horsemen,” that is Facebook (NASDAQ: FB), Amazon, Google (NASDAQ: GOOG) and Apple, without any the following:

1)      Mobile hardware

2)      Mobile operating systems

3)      An Internet Browser

4)      A Social Network

Her answer is what will continue to set Yahoo apart from the pack:

“Yahoo has always been a very friendly company, because of our focus, in addition to technology, but also on media, means that there's an opportunity for strong partnerships. And that's what we'll be focused on. So, for example: we work with both Apple and Google in terms of the operating system, in terms of social network we have a strong partnership with Facebook.”

Mobile and internet

Facebook and Apple can also be said to have a partnership of sorts, with the former in higher demand among tech investors. Facebook currently holds the title of most popular mobile app and preferred tech stock over Apple, according to the Wall Street Journal. One thing Marissa Mayer publicly recognizes she must do as CEO, is extend Yahoo's mobile reach.

With many mobile app providers lost on how to effectively monetize their services, Amazon did anywhere between $5 to $10 billion in mobile sales. Google also benefited from the growing mobile market, reporting a revenue increase of 39% in the last quarter.

Yahoo's ability to make money from mobile, or any internet experience for that matter, is going to depend on advertising. In the U.S. Display ad market, Emarketer projects Google to continue commanding the field with an 18% market share and Facebook as runner-up with 15% . It claims Yahoo will have much fighting to do, having to overcome an estimated 8% share.

Mayer's task will not be an easy one, but in her brief command of Yahoo thus far she's shown some understanding of strengths Yahoo can better play to.

Yahoo may currently be third in the search engine and e-mail categories after number 2 Microsoft and king Google (with over 66% of search market share), but as Mayer explained, it has more going for it than being just a content discovery platform, it produces a good deal of said content.

Yahoo is the number 1 news provider, beating Google News and its closest opponent, CNN by over 30 million visitors a month, placing it in a unique position to influence users and track their interests, which Mayer has plans to enlist, for perhaps, her most ambitious idea yet.

“There's the social graph, which I think is very important and fundamental, but I think what I'm talking about in terms of personalization, it will give wave to the interest graph.”

Yahoo getting more social

Mayer explained the interest graph concept as being able to link people by common interest. She used Jeff Weiner, the CEO of LinkedIn, as an example, pointing to the fact that they both had the same major while attending Stanford.

In a future where this interest function exists, Mayer sees individuals of similar interests meeting and connecting through Yahoo, with the ability to discover future interest-based connections. This information would be gathered into a transferable data mine, to which Mayer alluded during the interview. The idea itself is both simple and possible enough to be revolutionary to the internet experience. Like a Facebook social graph without walls, if you will.

“Alot of people say, well, when you type into the search box, that's your query—in the future—you become the query: it’s what you typed, it’s your background, it's where you are, it’s your preferences, it’s what you looked at yesterday, and the search box can take all of that as the input and come up with a set of results that are customized for you.”

Having only been at the post for half a year’s time, Marissa Mayer is in some aspects too new to rate, though since under her guidance, Yahoo has seen a steady rise of stock prices to the tune of 30%.  Her leadership of Yahoo appears most focused on returning the company to its roots of “the web ordered for you,” while making the search and media provider more friendly to mobile technology.

Mayer continues to defy even analysts' expectations. Yahoo did much better than they expected in the fourth quarter, earning $1.22 billion in revenue, a rise of 4%. Of the four horsemen, Apple reported flat earnings for the holiday season, Amazon's earnings fell by 45% and previously mentioned Google's revenue rose by 39%.

 


jsaintlaurent has no position in any stocks mentioned. The Motley Fool recommends Facebook and Google. The Motley Fool owns shares of Google. 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. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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