On The Bright Side: Yahoo! Rolls Ahead In Video Advertising
- Large tech incumbents are paying up major dollars for ad-tech assets.
- The Yahoo!-BrightRoll deal shows that large tech values scalability in the buy vs. build decision tree.
- Video platforms are drawing the most dollars and interest. Operators must show cross-device capability.
New Reason Appears For Yahoo Investors To Fear Alibaba's Business Structure
- Much of Yahoo's value still ties into its ownership of Alibaba's stock.
- Foreign ownership issues of Chinese securities came into question recently, possibly snaring major U.S. institutional investors.
- This brings up the issue of the corporate structure of Alibaba and its VIE issues.
- This article looks back at some of the considerations of VIEs and finds reason to be concerned about them.
- In addition, both Yahoo and Alibaba have been seeing declining EPS estimates, and as high P/E stocks, that topic also is problematic for investors.
- Like many companies, Yahoo must deal with persistent activist pressure.
- Starboard Value owns shares of both Yahoo and AOL, and thinks the two should merge.
- In its latest letter, Starboard urges Yahoo not to make the mistake of being too hasty to dump its Alibaba stake.
- Starboard warns the Internet company to not buy a media company.
Yahoo 2015 Outlook: Mobile Monetization And Tax Efficiency In Focus
- Mobile monetization and tax efficiency will likely dominate YHOO's headlines heading into 2015.
- Yahoo's presence in niche verticals remains compelling and offers a wide variety of monetization potentials.
- One point in tax reduction is equivalent to ~$400 million in tax saving. Such capital could be used to pursue accretive M&A to strengthen its niche verticals.
Mobile Advertising Is Yahoo's Biggest Tailwind In 2015
- Yahoo’s great run this year is not only due to Alibaba’s IPO. Investors also appreciate Yahoo’s emergence as a serious mobile advertising player.
- Yahoo management needs to imitate LinkedIn’s strategy in China.
- Acceding to play by the rules of Chinese censors will greatly improve Yahoo’s chances of grabbing significant share in China's ad business.
Yahoo: Three Major Growth Catalysts Going Into FY 2015
- Yahoo's equity interest in Alibaba will increase in value in FY 2015, and by estimates will be worth $56 billion.
- The core search business has better growth prospects, as a result of closing a deal with Firefox.
- Search revenue may increase to $4.32 billion, assuming users keep Yahoo as the default search engine.
- Native ads should drive financial performance, as they tend to perform better on a cost-per-impression basis.
- Yahoo Search may become Safari's default search engine.
- This puts Google in a tough position as it continues to battle anti-trust issues in Europe.
- Microsoft will also benefit as it shares 12% of Yahoo's search revenue.
- Following the Firefox deal, and assuming Yahoo can also get Safari, Yahoo may become the best play on Search going forward.
- Yahoo's assets and cash are a good hedge against downside risk.
- Yahoo's position in Alibaba has given it a lot of breathing room. It should carefully let its strategy unfold in 2015.
- Yahoo may still appreciate further if it continues to land big deals such as the new partnership with Mozilla Firefox.
Can Mayer Successfully Transition Yahoo: An Analysis Of Her Mobile-Centric Strategy And An Algorithmic Forecast
- Yahoo stock has more than tripled due to the company’s investment in Chinese e-commerce giant Alibaba.
- Yahoo has acquired new startups to enter new growth markets in online advertising.
- Yahoo is trying to find a tax-free way to return remaining investment in Alibaba to shareholders.
- I Know First algorithm correctly predicted stock price increase in June 30th article and forecasts a future bullish signal for Yahoo stock.
- Firefox will make Yahoo its default search engine.
- Yahoo's search business may undergo a significant period of growth, assuming factors such as pricing and the total number of ads sold increase significantly.
- When conservatively estimating the impact of Firefox, paired with growth in pricing, the search business may grow from $1.8 billion to more than $4 billion in revenue over the next three years.
Yahoo-Mozilla Deal Likely Worth Billions For Yahoo
- Yahoo's search engine will soon be the default search for Firefox, which currently controls 14-19% of the browser market share.
- I estimate that this deal will add $2-2.7 billion of revenue to Yahoo per year, and $2.3-3.1 billion if Yahoo terminates its search engine deal with Microsoft next year.
- Yahoo may be able to capitalize further on this tremendous opportunity by increasing Firefox usage through promotion on its web page.
- YHOO is suitable for Enterprising Investors following the ModernGraham approach.
- According to the ModernGraham valuation model, the company is fairly valued at the present time.
- The market is implying an 11.28% earnings growth over the next 7-10 years, within a margin of safety relative to the rate the company has seen in recent years.
Yahoo's Acquisition Of BrightRoll Highly Accretive Over The Next 5 Years
- Yahoo acquired BrightRoll, a programmatic ad buying platform, which is distinct from a real-time bidding exchange.
- Programmatic ad buying is expected to grow at a fairly high rate as advertisers re-appropriate marketing budgets for targeted ad-buying across publishers.
- The $640 million acquisition offers meaningful upside prospects, as video advertising is expected to take off along with programmatic ad-buying.
Update: Yahoo's Acquisition Of BrightRoll Is A Significant Step In The Right Direction
- Yahoo has been looking to double down on video advertising, and has confirmed it is buying BrightRoll.
- This acquisition supports my original thesis that Yahoo would need to acquire video ad technology to succeed.
- This acquisition means that Yahoo will likely not acquire AOL.
Yahoo Eyes Video Ad Dollars With BrightRoll Acquisition
- This acquisition can catapult Yahoo to a No. 1 position in terms of the number of ads served in the US.
- BrightRoll leads the video ad tech industry, and continues to dominate over some of the top ad tech platforms such as LiveRail and Adapt.tv.
- Video online ad spending is expected to exceed $12.71 billion by 2018.
- Yahoo has moved considerably higher as a result of Alibaba.
- However, core business developments and the prospects of future capital returns make the investment opportunity extremely promising.
- On purely a tangible basis, Yahoo is worth $42.28 billion.
- However, after running an updated sum-of-the-parts analysis, the business should be worth $56 billion (conservatively).
- Various newer divisions of Yahoo are becoming profitable, presenting opportunities for future growth.
- The Display segment continues to struggle.
- Many of the new revenue drivers will demand attention in upcoming quarters.
May. 28, 2014, 1:58 PM
- Asked whether he supported Microsoft's (MSFT -0.4%) oft-criticized $7.2B acquisition of Nokia's phone unit when it was first struck, Satya Nadella declined to answer during a Code Conference talk (live blog).
- Bloomberg previously reported Nadella and Bill Gates (among others) voiced objections to the deal, and that Steve Ballmer was its driving force.
- Nadella declared Microsoft has no plans to sell Bing, which has generated huge losses over much of its history, to partner Yahoo (YHOO -0.7%). Marissa Mayer has expressed dissatisfaction over the performance of the Bing/Yahoo partnership (set to last until 2020), and has reportedly launched search tech projects meant to lower Yahoo's Bing dependence.
- Nadella also: 1) Asserted he has "no intent to do anything different on Xbox" than what Microsoft's doing today. 2) Stated Gates, who recently promised to spend over 1/3 of his available time at Microsoft, has "got some specific interest in Office and how to reinvent it."
- Separately, Microsoft is acquiring Capptain, a developer of analytics/usage-monitoring tools for app developers. Microsoft says it will integrate Capptain's offerings with its Azure cloud app platform (PaaS) services. The company has already rolled out a slew of new Azure tools this year.
May. 27, 2014, 7:19 PM
- Yahoo (YHOO) is "ramping talks with video producers" ahead of a planned summer launch for a would-be YouTube (GOOG) rival, AdAge reports.
- Backing up a March re/code report, AdAge's sources state Yahoo is looking to lure top YouTube content creators with a choice of either better ad splits - YouTube normally takes 45% - or a fixed ad rate 50%-100% higher than YouTube's average net rate. Yahoo is also comfortable allowing creators to simultaneously upload to YouTube.
- While some creators are interested, others are said to be lukewarm, given their ad rates are currently well above the YouTube average. Moreover, YouTube recently launched a program (Google Preferred) that allows brand advertisers to buy ads for top creators alone.
- Moreover, creators have reportedly bristled over some of Yahoo's initial demands, such as giving Yahoo a perpetual license to videos shared on Tumblr. One producer: "Anyone who's done a content deal knows that would never fly."
- Yahoo, bent on growing its video ad inventory, has already struck a high-profile deal with Katie Couric and has begun dabbling in original content. More recently, the company was reported to be a near a deal for streaming software/services firm RayV.
May. 20, 2014, 5:26 PM
- RayV offers a cloud-based platform for encoding, delivering, and monetizing professional-grade Web/mobile video. The company asserts its proprietary congestion control tech (adapts to network conditions) allows it to outperform YouTube and Netflix.
- The WSJ reports Yahoo (YHOO) is "close to finalizing" an acquisition of RayV, and notes its technology could bolster Yahoo's video-streaming infrastructure.
- Yahoo has struck multiple high-profile deals to expand its professional video inventory (a priority of Marissa Mayer's), and is also reportedly looking to poach top YouTube talent. At the same time, the company has been thwarted in its efforts to acquire Hulu and Dailymotion.
- The WSJ reported in March Yahoo was in preliminary talks to buy leading video syndication platform NDN.
May. 19, 2014, 4:05 PM
- Citing sources, CNBC reports Alibaba (ABABA) "could look to make its stock market debut the first week of August."
- The company reportedly expects to receive feedback from the SEC about its F-1 filing (published two weeks ago) as soon as June 7, and then "spend a few weeks correcting or clarifying any issues raised." Presumably, Alibaba would then launch its IPO roadshow.
- Yahoo (YHOO +1.4%) followed Internet peers higher today. The company sold off after Alibaba filed its F-1, but rallied in April after posting Alibaba's Q4 numbers.
- The Q4 figures led some of the sell-side to argue a $200B+ post-IPO valuation is possible. The recent selloff in Chinese Internet stocks might temper Alibaba's multiples a bit.
- Related tickers: SFTBF, SFTBY
May. 19, 2014, 11:59 AM
- Yahoo Japan (YAHOF) has abandoned its plan to acquire Japanese mobile/broadband services firm eAccess from SoftBank (SFTBF) for $3.2B (previous). Instead, the company will launch a low-cost mobile broadband service using eAccess' network.
- The eAccess deal was part of an effort by SoftBank, which owns 42.6% of Yahoo Japan, to restructure its assets and raise funds for M&A (including a possible Sprint/T-Mobile merger). But the company is already raising ¥300B in debt, and stands to reap a post-IPO windfall from its 34.4% stake in Alibaba.
- Yahoo (YHOO +0.6%) owns 35% of Yahoo Japan, whose shares fell 2.8% in Tokyo overnight. At current levels, Yahoo's stake is worth $8.1B. Yahoo Japan's sales fell 14% Y/Y in Q4 to $1.03B, and its net income 11% to $304M.
May. 15, 2014, 4:39 PM
- After cutting its Yahoo (YHOO) stake in half to 8M shares in Q4, Dan Loeb's Third Point LLC fully liquidated its position in Q1. (13F).
- Loeb, whose fund once owned 60M Yahoo shares, resigned from the company's board last July as part of a deal to sell back 40M shares to the company. His decision to exit Yahoo comes ahead of Alibaba's much-anticipated IPO.
- Loeb also liquidated the 10M-share BlackBerry (BBRY) position he established in Q4. BBRY -1.6% AH.
- A 4M-share position in Activision (ATVI) and a 1M-share position in NXP (NXPI) were also unloaded. A 2M-share position was taken in Avago (AVGO), as was a 2.55M-share position in Citrix (CTXS) and a 1.6M-share position in Brazilian carrier TIM Participacoes (TSU).
May. 15, 2014, 4:18 AM
- Google (GOOG, GOOGL) has reportedly received requests to exclude links from its search results following the landmark European ruling on Tuesday that the company can be asked not to display information that is old or irrelevant.
- One of the requests came from a politician who wants to suppress links to news articles about him.
- Google and Yahoo (YHOO) are analyzing how they're going to implement the decision amid fears that they're going to be inundated with requests. What doesn't help is that the court ruling doesn't provide too many clear guidelines.
- "It's just such a mind-bogglingly impossible decision," says Indiana University's Fred Cate. "Courts aren't responsible for the practical implications of rulings but this really staggers the imagination."
- Relevant ticker: MSFT
May. 14, 2014, 7:23 AM
- The deal for undisclosed terms comes days after Snapchat settled FTC charges accusing it of deceiving customers by promising photos sent on its service disappeared forever after a certain amount of time.
- Yahoo (YHOO) has yet to comment on the purchase, which was announced on the Blink website, but the deal is the latest in a number of small, mobile start-ups acquired since Marissa Mayer took the helm.
- Snapchat, of course, famously rejected a $3B purchase offer from Facebook late last year.
May. 13, 2014, 4:52 AM
- The European Union Court of Justice (ECJ) has ruled that Google (GOOG) can be ordered to delete sensitive information, under certain conditions, from its Internet search results if it is requested to do so.
- Google had argued that forcing it to remove data amounted to censorship, although privacy advocates believe that people should be able to delete their digital traces.
- The issue arose after a Spanish man complained that his privacy was infringed when an auction notice of his repossessed home appeared on search results.
- Other relevant tickers: YHOO, MSFT, YNDX, BIDU
May. 7, 2014, 10:50 AM
- Has irrational exuberance given way to panic selling? Internet stocks are off again today, as the Street registers disappointment with earnings reports from AOL, Groupon, Zulily, SouFun, 500.com, and King.
- Yahoo (YHOO -6.2%) has fallen below $35 as the Street digests Alibaba's IPO filing. Twitter (TWTR -4.4%), crushed yesterday following its lockup expiration, briefly cracked $30 before rebounding a bit.
- Other decliners: QIHU -8.9%. BITA -7.2%. GOMO -7%. TRLA -5.2%. MELI -4.7%. ANGI -4.6%. Z -4%. YOKU -5.5%. CTRP -5.3%. WUBA -5.3%. JOBS -5.1%. GRUB -4%.
- Internet/social media ETFs: PNQI, SOCL, FDN
May. 7, 2014, 8:04 AM
- Bloomberg reports Alibaba (ABABA) is looking to sell a 12% stake through its IPO. At a $150B valuation, that would imply raising $18B; at a $200B valuation, $24B.
- A big selloff in momentum stocks (inc. Chinese Internet companies) might lead to some downward pressure on Alibaba's multiples. At $200B, the company would be worth 92x 2013 adjusted net income of $2.16B - forward multiples might be considerably lower.
- Meanwhile, though Yahoo (YHOO) is required to sell a chunk of its 22.6% stake at IPO time, SoftBank (SFTBF) says it won't sell any part of its 34.4% stake, in spite of its big investments in Sprint and $3.2B deal to buy Japanese broadband provider eAccess. Shares fell 5.1% overnight in Tokyo.
- There's some disappointment over the fact Alibaba didn't break out details for its Taobao and Tmall sites. Would-be investors are also keen to learn more about how Alibaba plans to grow its international sales (8.8% of 2013 revenue), an effort bound to put the company on a collision course with Amazon and eBay.
- Yesterday: Alibaba files for IPO, shows off big numbers
- Alibaba's prospectus
May. 6, 2014, 5:00 PM
- Alibaba (ABABA) has released its long-anticipated F-1. No trading symbol has been proposed yet, and the company nominally says it's looking to raise up to $1B (it'll almost certainly raise more). The IPO underwriters: Credit Suisse, Deutsche, Goldman, JPMorgan, Morgan Stanley, and Citi.
- Alibaba had 2013 revenue of $5.55B (+73% Y/Y), net income of $1.35B, and adjusted net income of $2.16B. Gross margin was 71.9%. R&D spend totaled $604M, sales/marketing spend $581M, and G&A spend $465M.
- The company claims an annual gross merchandise volume (GMV) of $248B on the back of 11.3B orders, 231M active buyers, and 8M active sellers.Q4 GMV rose 53% Y/Y to RMB529B, with mobile accounting for 19.7% of the total. Mobile MAUs amount to 136M.
- Chinese commerce accounted for $4.69B of the company's 2013 revenue. International commerce accounted for $669M, cloud services $105M, and everything else $87M.
- Founder Jack Ma owns 8.9% of shares going into the IPO. SoftBank (SFTBF) owns 34.4%, and Yahoo (YHOO) 22.6%.
- Yahoo investors are taking the F-1 release in stride. Shares -0.3% AH.
May. 2, 2014, 11:12 AM
- Re/code reports Alibaba's (ABABA) anticipated IPO filing is expected to arrive early next week.
- Yahoo (YHOO +0.7%) has caught a slight bid on the report. Shares jumped two weeks ago after the company announced Alibaba's Y/Y revenue growth accelerated to 66% in Q4 from 51% in Q3, and that its net income grew 110%.
Apr. 25, 2014, 3:35 AM
- Alibaba (ABABA) is considering expanding its IPO to over $20B, which would make it the largest listing in U.S. history, the WSJ reports.
- The offering would be above the $19.7B that Visa raised in 2010 and could even top the world record $22.1B that Agricultural Bank of China attracted in Shanghai and Hong Kong in 2010. Until now, figures of $15-16B have been bandied about for Alibaba's IPO.
- Under the plan being discussed, Alibaba would sell shares in addition to its investors, which include Yahoo (YHOO). Another major shareholder, Softbank (SFTBF), is not planning to sell shares in the deal.
- "Alibaba is at the point where, after the extreme growth they've had, they're going to need capital to make another huge push forward," says investment adviser Paul Boyd.
Apr. 21, 2014, 12:43 PM
- BrightWire reports Alibaba's (ABABA) is still working on its anticipated F-1, and won't file the document this week. Reuters previously reported a filing could happen by today.
- Separately, Alibaba has said it plans a major revamp of its massive Taobao marketplace (focused on consumer sales), whose UI has occasionally been criticized. Alibaba promises to improve Taobao's navigation (making it less dependent on search activity), as well as to add interactive features for its mobile apps.
- The Street's expectations for Alibaba's IPO were ratcheted higher last week after Yahoo (YHOO -0.1%) reported the company's sales rose 66% Y/Y in Q4 to $3.06B, and its net income 110% to $1.35B. Many think a $200B+ valuation is in the cards.
Apr. 17, 2014, 10:52 AM
- Yahoo (YHOO -1.1%) co-founder David Filo, absent from the company's board for 18 years, will stand for election at Yahoo's 2014 annual meeting.
- Filo began taking a more active role at Yahoo in 2012, following Marissa Mayer's hiring, and remains a major shareholder.
- Yahoo has also nominated Charles Schwab, founder of the brokerage that bears his name, and former Wal-Mart CEO H. Lee Scott Jr. to its board.
- Following recent defections, Yahoo's board only has five members. Schwab and Scott mesh with the company's reported interest in adding directors with experience running a major company.
- Yesterday: Yahoo lands upgrades following Q1 report, Alibaba numbers
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