NASDAQ: YHOO
2/28/2012
Turner Novak
Mark Blazo
• Buy 100 shares @ $21.31
• $2,131
• 4.71% of portfolio
Yahoo Overview
• Founded in 1995
• Sunnyvale, CA
• 14,100 employees
Yahoo Today
• 2nd largest online
advertising platform
• 240+ Million users
• Personalized digital content
• Communications, Search, and
Media
• Not just a search engine
Yahoo Tomorrow
• New executive team
• Hire/Buy talented
employees/programmers
• Transition from media to mobile
• Monetize mobile offerings
• Improve advertisers capabilities to
create and manage their own ad
campaigns across Yahoo’s network
Q4 Earnings Call Takeaways
• Revenue was flat
• Earnings up
• Lots of excess cash
– Continue share buybacks
– Continue acquisitions
• Commercializing and monetizing products
• Transition from display ads to mobile ads
• Just under 200 million mobile users
Q4 Earnings Call Takeaways
• Currently 75 mobile apps
– Reducing to “about 12”
• Remodel the 12 apps that will stay in the
portfolio
• Continue acquiring
companies between $10 $100 Million to buy
talented programmers
New Management Team
CEO - Marissa Mayer
• Google’s 20th employee
• VP of Search Products, User
Experience, Local, Maps,
and Location
• Developed Google’s Search
and Contextual Discovery
• Very involved in hiring new Google employees
• Part of 20 acquisitions at Google
• Programmer – Unlike previous Yahoo CEO’s
New Management Team
CFO - Ken Goldman
• Three decades of experience
in software and internet
companies
• History of fiscal discipline
and internal controls
COO – Henrique de Castro
• Brought in to repair Yahoo’s
relationship with big ad agencies
• Built Google’s display advertising
business from scratch
• Monetized Youtube
New Management Team
VP of People – Jackie Reses
• Experience in Private Equity investing in
media and technology
• Training and development of new
employees
• Firm grasp of acquisitions through PE
experience
CMO – Kathy Savitt
• CEO of Lockerz
• CMO of American Eagle
• VP of Amazon
• In charge of worldwide
marketing and branding
Institutional Ownership
• Greenlight Capital, David Einhorn
– Predicted the downfall of Lehman Brothers
– Exposed accounting and inventory problems at
Green Mountain Coffee Roasters
– First to discover disclosure changes at Herbalife
• Third Point Capital, Daniel Loeb
– Exposed previous Yahoo CEO resume blunders
– Pitched for Mayer to become new CEO
Strategy for Growth
•
•
•
•
•
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Not moving away from media completely
Media Technology company
Tangible products, not just a website
Integrate products with users lives
Increase search market share
Bring in talented employees
– Acquire small, “failed startups”
with talented programmers
Current App Portfolio
Flikr vs. Instagram
Investments in Other Companies
Yahoo’s Value
13.2
11.7
3.1
+ 1.6
29.6%
Core Business
21.44 x 29.6% = $6.35 per share
Yahoo’s Value
• Bought 40% stake in Alibaba (Chinese
Amazon) in 2005 for $1 Billion
– Sold half of it for $7.6 Billion in 2012
• Remaining stake is valued at $7.6 Billion at
current Total valuation of $38 Billion
• Projected IPO by the end of 2014
• Expected to be valued up to $150 Billion
Yahoo’s Value
Risks
• Strategic search alliance with Microsoft
• No operating system of its own
– Not necessary for apps
• Many different platforms/apps make it
difficult for Yahoo to appeal to advertisers
– Lowering number of apps
• Yahoo is a tech company
– Also a media company
Investment Thesis
• Capable management team
in place
• Cash available to spur growth
• Mobile use globally will
continue to increase
– There is no clear “Apple” of
mobile products
– Will it be Yahoo?
• Buy 100 shares @ $21.31
• $2,131
• 4.71% of portfolio