Allen Weiner

Good news for Yahoo watchers: the company’s search-advertising and display-advertising businesses each improved from the company’s third quarter, but were down compared with the fourth quarter of 2008. Yahoo’s search-ad revenue declined 15% from a year ago, compared with a 19% drop in the third quarter. Its display-advertising revenue fell 1% from a year ago, an improvement from the 8% drop in its third quarter. Any signs of an up tick—a Q3 to Q4 bump—is welcome for the iconic brand looking to re-invent itself under Carol Bartz’s steady hand. Bartz has a year under her belt and now has a nice gold star to put on her resume, although Yahoo’s Q4 success says more about the overall economy than any explicit effort from the company.

Far more interesting, and certainly more bloggable, is the topic of the pending Yahoo shopping spree. The company has in excess of four billion in cash and securities and knows it is well advised to spend some of its war chest to bolster some weaker areas as well as move in new directions.

Alas, the kid in the candy store. Bartz said the focus in acquisitions will be in three key areas: small to medium sized companies in which Yahoo buys technology and talent; companies with assets in the content and community space and companies that add to or strengthen Yahoo’s geographic footprint. There certainly will be a show of hands of companies looking to be acquired, but here are some thoughts on judicious sending of that four billion.

Mobile: Despite its claims, Yahoo lags in mobile. Yes, its content is available on a variety of Smartphones, but that’s not something to add to the brag book. Yahoo needs to get far closer to the device/hardware manufacturers where it offers the same sort of platform (Connected TV) it offers TV manufacturers. On this front, it may be too little too late, so caution is urged.

Content: Yahoo is a leader is many content verticals, but it could learn a lesson from AOL (Yes, I said AOL) in exploring some larger niche areas. Yahoo should acquire the assets of content providers who specialize in serving the African-American, Hispanic and Gay/Lesbian communities. Yahoo may also want to consider an acquisition of a virtual studio similar to AOL’s recent acquisition of StudioNow. Such a buy would give Yahoo content czar Jimmy Pitaro the infrastructure he needs to produce more monetizable video.

Miscellaneous: Note to Hilary Schneider: I have no good name for this, but I would love to see Yahoo really step up its game in working with newspaper publishers. The consortium is a nice start but the effort is sorely lacking in firepower. Why not take on the role of content management for newspapers acting as their “cloud,” hence offloading some of the costly IT and distribution costs, allowing publishers to focus on editorial products. The window to excel in this space is limited; Google has this one figured out with Google Editions but may lack the goodwill to convince newspapers of its good intentions. Yahoo, on the other hand, already has demonstrated its desire to assist newspaper thus giving it a leg up on the competition.

Well, far be it for me to tell someone how to spend his money, but a few good buys and Yahoo may be less reliant on external forces to succeed and far more self reliant.

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Category: Yahoo     Tags: Hilary Schneider, Jimmy Pitaro, StudioNow, Yahoo

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