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Tuesday, January 29, 2013

Yahoo takes on Google in search wars

Marissa Mayer
Marissa Mayer (Photo credit: Wikipedia)
 New York, Jan.29, stock investing . Marissa Mayer plans to overhaul Yahoo’s search engine to regain ground lost to her former employer Google, after reporting better than expected results for the fourth quarter.
“Overall, we have a big investment that we want to make and a big push on search,” said Ms Mayer, who was appointed Yahoo’s chief executive in July. “We have lost some share over the last few years and we would like to regain that share.” 

Yahoo beat earnings estimates by more than 14 per cent in its fourth quarter, driven by growth in search advertising, despite a year-on-year drop in profits and an unexpected decline in display advertising revenues.

Revenues from search advertising, where Yahoo has a partnership with Microsoft, rose 14 per cent to $427m in the quarter ended December compared with the same period of 2011, better than analysts had expected.
The result marked Yahoo’s highest quarterly search revenues, net of distribution costs, since the third quarter of 2010 – before the struggling web portal struck a deal with Microsoft which sees it pay a 12 per cent share of revenues to the Redmond-based company.
Earnings growth was driven by improvements to Yahoo’s user interface on desktop and mobile, favourable seasonal trends in the Christmas quarter and changes to Microsoft’s ad-serving technology.
Yahoo’s share of the US search advertising market has fallen from 17.8 per cent in 2008 to 6.2 per cent in 2012, according to eMarketer, a researcher.
In Ms Mayer’s first full quarter as chief executive, Yahoo saw 4 per cent growth in revenues to $1.2bn, net of payments to partner sites and other distribution costs, compared with the fourth quarter of 2011. Ms Mayer has said she wants to put mobile and “daily habits” such as email and news at the heart of her turnround strategy for the Silicon Valley veteran.
“While the road to growth is certain, it will not be immediate,” Ms Mayer warned, saying that her changes would take several years.
Nonetheless, some of Ms Mayer’s short-term changes have already boosted user engagement.
A redesigned Yahoo Mail app boosted daily users by 10 per cent while a new Flickr iPhone app drove a 25 per cent increase in the number of photos viewed and shared. Total mobile users across Yahoo increased to more than 200m, although Ms Mayer warned that smartphones were “still a very nascent source of revenue for us”.
Shares in Yahoo, which have risen by more than 25 per cent in the past six months, initially jumped almost 5 per cent in after-hours trading on Monday, but later pared back those gains after Yahoo warned of an “investment phase” in the first half of this year.
Yahoo reported full-year revenue growth for the first time since 2008. However, the growth in sales was unable to offset an 8 per cent decline in net income for the fourth quarter to $295.6m
Net earnings per diluted share fell 22 per cent to $0.32 in the quarter, compared with Wall Street expectations of $0.28.
Revenues from display advertising, less traffic acquisition costs, fell 5 per cent in the fourth quarter. Yahoo faces increasing competition in the market from Facebook, Twitter and, increasingly, Amazon , as more online ad buying becomes automated.
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