Yahoo

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Presented By Dinesh.G 1020210 N.Krishna Teja 1020217 Prasidh Prasad 1020223

COMPANY OVERVIEW
 Yahoo! is the premier digital media company.  Founded in 1994 by Stanford PhD candidates David Filo and Jerry Yang.  Yahoo! received funding from Sequoia Capital, a Silicon Valley venture capital firm that’s legendary for investing in technology successes.  Yahoo! is headquartered in Sunnyvale, Calif., and has more than 13,000 employees in 25 countries, provinces, and territories.  Business focus is on creating a content, communications, and community platform that delivers rich consumer experiences and advertising solutions across all digital screens.  Attract more than half a billion consumers every month in more than 30 languages.  Yahoo! reaches more than half a billion people worldwide – that’s 1out of every 2 Internet users

What are the core components of Yahoo!'s business?
Digital media • Yahoo is the leading online ad network in the U.S Content • Yahoo News Network, Yahoo Sports and partners with numerous content providers in products such as Yahoo Finance ,Yahoo Music , Yahoo News, Yahoo Answers and Yahoo games. • Yahoo also provides a personalization service, My Yahoo, which enables users to combine their favourite Yahoo features, content feeds and information onto a single page. Communications • Yahoo Mail has more than 92 million unique visitors. • Yahoo Messenger is the top-ranked instant messaging service in the U.S, attracting more than 20 million unique visitors per month. • Yahoo provides Internet communication services such as Yahoo Messenger. • Yahoo also offers social networking services and user-generated content in products such as My Web, Yahoo Personals,Yahoo 360,Flickr and Yahoo Buzz.

Revenue model
• About 88% of total revenues for the fiscal year 2010 came from marketing services.The largest segment of it comes from search advertising, where advertisers bid for search terms to display their ads on the search results, on average Yahoo makes 2.5 cents to 3 cents from each search. • Other forms of advertising which bring in revenue for Yahoo! include display and contextual advertising.

Products and Services

• Yahoo! operates the web portal which provides content including the latest news, entertainment, and sports information. The portal also gives users access to other Yahoo! services like Yahoo! Mail, Yahoo! Maps, Yahoo! Finance, Yahoo! Groups and Messenger.

• Yahoo! Mobile offers services for email, instant messaging and mobile blogging, information services, search and alerts entertainment, ring tones, and Yahoo! Photos for camera phones. • Yahoo! offers commerce services such as Yahoo! Shopping, Yahoo! Autos, Yahoo! Real Estateand Yahoo! Travel, which enables users to gather relevant information and make commercial transactions and purchases online

• Yahoo! provides services such as Yahoo! Domains, Yahoo! Web Hosting, Yahoo! Merchant Solutions, Yahoo! Business Email and Yahoo! Store to small business owners and professionals allowing them to build their own online stores using Yahoo!'s tool

• Yahoo! Search Marketing provides services such as Sponsored Search, Local Advertising, and Product/Travel/Directory Submit that let different businesses advertise their products and services on the Yahoo! network. • Yahoo! Next is an incubation ground for future Yahoo! technologies currently in their beta testing phase. • Yahoo! Search BOSS is a service that allows developers to build search applications based on Yahoo!'s search technology.

• Yahoo! Meme is a beta social service, similar to the popular social networking sites Twitter and Jaiku. • Y!Connect is a feature that enables individuals to leave comments in online publication

Top five products
• • • • • Yahoo Messenger Yahoo Mail Yahoo Movies Yahoo Games Yahoo News

ASSETS & INVESTMENTS
• Yahoo! owns about 40% of Alibaba.com, which includes e-commerce businesses such as Taobao and Alipay, China's equivalent to eBay • Yahoo’s share price over the last ten fell 91%. 3 before the company rejected Microsoft’s acquisition of up to $ 47.5 billion offer, but its current market value of only $ 14 billion.

Reasons for the failure
Focussing itself as a media company than a technology company  They insisted on calling themselves a media company since they
were into ad business.  Fear of aquisition by microsoft.  Project managers at Yahoo were called "producers," for example, and the different parts of the company were called "properties."

Focus on start ups for revenue (de facto Ponzi scheme)
 By 1998, Yahoo was the beneficiary of a de facto Ponzi scheme.  Inspired by the growth of Yahoo investors were excited about the Internet. So they invested in new Internet startups.  The startups then used the money to buy ads on Yahoo to get traffic. This resulted in yet more revenue growth for Yahoo.

Less focus on search and more on ads • In 1999 , Search formed 6% of the traffic, and the company was growing at 10% a month. • The big money then was in banner ads. Advertisers were willing to pay ridiculous amounts for banner ads. • Yahoo's sales force exploited this source of revenue. Both the Internet startups and the Procter & Gambles were doing brand advertising..So traffic became the thing to get at Yahoo. Lack of hacker-centric cultures • Any company that needs to have good software should be hacker centric. Microsoft (back in the day), Google, and Facebook have all had hacker-centric cultures. • The consequence of trying to be a media company was that they didn't take programming seriously enough. Microsoft (back in the day), Google, and Facebook have all been obsessed with hiring the best programmers. • There are very few instances where a company has sunk into technical mediocrity and recovered.

Botched outsourcing Take, for example, the shutting of Geocities, which (according to the infographic below) eliminated $3.6 billion from Yahoo!'s bottom line. Most recently, Yahoo! outsourced its shopping content to PriceGrabber, its personals to Match.com, and its real estate to Zillow. While this likely gave Yahoo! a new source of ad revenue, you have to wonder: at what cost was this new revenue obtained? If, for example, the contribution margin was greater with Yahoo! Personals than with the ad dollars acquired from Match.com, then Yahoo! is worse off than before. Lack of innovation • Yahoo is not able to keep up with the pace of innovation in online media. • Yahoo appears to be at a virtual standstill with new product and service introductions when the competition is comprised of Google, Apple, Facebook.

Attempt by Microsoft

Online Advertising Market Opportunity
Key Industry Traits
78 65 53 41
Scale Economics Technology Driven Significant Capital Costs Driving Consolidation
INVENTORY Attracts advertisers to the network

ADVERTISERS Attract publishers into network

Synergies & Value Creation

EXPANDED R&D CAPACITY

EMERGING USER EXPERIENCES

OPERATIONAL EFFICIENCIES

Transaction Summary
OFFER  $44.6 Billion  $31 per share • $31 cash, or • 0.9509 of Microsoft share  Targeted to close in 2nd half of CY’08  62% premium to Yahoo! Closing Price on 1/31/08

The Road Ahead for Yahoo
To prosper into the future, Yahoo must consider the following: • 1. Yahoo must further monetize its considerable traffic through a refinement of its display advertising revenue model. Yahoo must increase the value it delivers to advertisers, while maintaining or reducing its own cost structure. • 2. Yahoo must start innovation either through internal development or targeted acquisitions. To stay competitive, Yahoo must (a) continue to improve its online content and services (e.g., maps, email, games, jobs listings) (b) further develop a multi-platform strategy (e.g., mobile, tablets, connected TVs) (c) explore and implement innovations in display/push advertising • 3. Yahoo must rebuild its human capital.Yahoo must restore its brand image to attract top technical, marketing, and management talent from around the world.

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