Yahoo - Still Alive And Getting Stronger

| About: Yahoo! Inc. (YHOO)

Yahoo! (NASDAQ:YHOO) is a survivor, but just barely.

In the rubble left over from the burst of the 2000 tech bubble, not a lot of Internet companies returned to the dual task of satisfying customers and making money.

So many overvalued but unstable tech companies crashed hard and burned. But Yahoo! and a few others tried recovery methods like deep cuts; changing their business model; or finding other companies to bail them out. America Online (NYSE:AOL), for instance, stopped sending out free discs, allowed users to access the site's features for free, and found a partner in Time Warner (NYSE:TWX).

Yahoo! also weathered the storm - it dumped its print magazine, rebuilt its site often, and continued looking for new ways to bring in advertisers. Its main portal page still offers the same philosophy: a customizable display of everything going on in the world, a feature which Google (NASDAQ:GOOG) tried to the opposite of with its virtually empty front page.

Yahoo! has also created ways for users to dig deeper in hobbies, interests or careers, including forums, chat areas, even a messenger service.

Is it working? It seems to be. Will it be working next year? Also maybe.

The reason for the uncertainty is due to a mixture of positive news but challenges ahead. Investors looking long-term may want to hang onto their stock just to see what kind of magic remains possible from CEO Marissa Mayer, who took control in 2012.

Mayer told Bloomberg's Business Week last week that Yahoo! has 800 million active monthly users. It also saw more U.S. visitors than Google last July, the first time it hit that figure in two years. It also saw a 20 percent increase in users since she came aboard.

This year it acquired 19 companies, including Tumblr, a trendy photo site, plus mobile sites Stamped and Jybe, and a news-reading site called Summly. Fresh cashflow from the purchases came from selling half the shares of a Chinese company called Alibaba for $7.6 million.

The stock closed last Friday at $30.92 per share, down 11 cents from the previous day. In the last year, shares have ranged from $15.15 last fall to $31.10 earlier this month. It has seen a 47 percent climb since fall, and 86 percent since June 2012. All in all, it's a steady climb from the decline that began in 2008, but nothing like the 100-point fall between 2000 and 2002.

Mayer has tried to rebuild loyalty within the company and in the marketplace. The 38-year-old recently made Fortune's "40 under 40" list of tech moguls, the first time a woman has topped this list. Lower on the list were Facebook (NASDAQ:FB) CEO Mark Zuckerberg and Square's Jack Dorsey.

According to, she conveys a simple yet effective mantra internally and externally: people, then products, then traffic and revenue.

But as good as Mayer's efforts seem to be paying off in the short term, competitors Google, Microsoft and Facebook aren't going to be standing still.

Bloomberg reports that Yahoo!'s share of the display ad market is expected to drop 1.3 percent to 9.2 this year, but grow from 15 percent 18 percent for Google and from 15 to 17 percent for Facebook.

Microsoft (NASDAQ:MSFT), which maintains its Bing search service, also is looking for ways to remain ahead of the tech pack, such as trying to get customers to try Windows Phone and acquiring part of Nokia (NYSE:NOK). Microsoft is pushing a new "phablet" this fall or winter, which will offer the functional features of smartphone but a tablet look.

This fall, Yahoo! will show a potentially new, stronger foothold -among TV viewers. Like Netflix (NASDAQ:NFLX), Hulu or Amazon (NASDAQ:AMZN), people love watching shows online, whether it's a rerun of a favorite show, a series they missed the first time around or new programs.

Desktop and mobile viewers can now watch 1,000 hours of comedy, plus the new Yahoo Screen, which makes it easy to switch categories.

Yahoo!'s new TV source might be just what the marketplace needs, or perhaps offer nothing original compared to other on-demand offerings. But it is also a perfect opportunity to not only educate the public about the new service but just to remind them that Yahoo! never really went away.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.