What is next for Yahoo? – Acquisition spree continues

Marissa Mayer took charge of Yahoo in July 2012. She has tried to radically change the company culture, while often controversial, Yahoo is certainly not seen as the former giant, that is now old-school and just not worth looking at for the rising talents within the tech industry.

When Mayer took charge of Yahoo, the closing price on NASDAQ was $15.65, within a year the share price nearly doubled to $29 and a year later now is trading at around $35.

With the appointment of Mayer, the Yahoo board was on a mission to breathe new life into the company and also shutting down critics who went up against them when they turned down the $33 per share offer from Microsoft to acquire the company in 2008.

While the share price has had a run under the new CEO, the road ahead will be challenging.

A majority of the growth within the Yahoo Group has come from Alibaba which Yahoo owns 24% of. The company reported $3.06 billion in revenue in the first quarter, that is an astonishing increase of 66% year over year. That growth has helped Yahoo when it comes to their own struggles of growing revenue and profit. But it remains to be seen, what impact it will have when Alibaba goes public and Yahoo has to sell about 10% of their shares in the company.

One thing it will do for sure is give Mayer additional cash to continue her acquisition spree in order to transform the company, grow the user base and ultimately revenue and profits.

The company just announced that it has acquired the online video platform RavY.

Here is what the Israel-based company had to say:

“Our RayV adventure now comes to a pivot, and we couldn’t be more excited. We believe Yahoo will be a perfect fit for our people and capabilities, as Video and Mobile offerings are a central part of Yahoo’s vision. Yahoo’s global scale and broad content base, combined with its amazing leadership and appetite for success, creates an ideal environment for our team to thrive and be pushed to the next level.”

RavY has been around for 8 years and has 11 employees. While we are not familiar with the IP that made them interesting for Yahoo, it certainly isn’t the high profile acquisition Mayer was hoping for as she previously has failed to come to an agreement with Hulu for example.
So Google doesn’t have to be concerned about serious competition for YouTube just yet.

The RavY acquisition is just one name in a long list of acquisitions since Mayer took over as the new CEO. Two years and 39 acquisitions!

Tumblr ($1.1 billion), Summly ($50 million), Qwiki ($50 million), Xobni ($40 million), Lexity ($35 million), Snip ($10 million), Ptch ($6.5 million) have been the biggest acquisitions. The price for RavY has not been made public.

So what is next for Yahoo?

Integrating 39 companies within a two year timeframe isn’t an easy task and while the company saw some growth during the past quarter you have to wonder when these acquisitions are actually going to pay off.

Short-term Yahoo is going to rely on the growth and IPO success of Alibaba.

Long-term they have to grown their user base, especially in the mobile segment and turn that into advertising revenue. In addition to that the acquisition spree has to slow down at some point and the focus needs to be on integrating these companies and the technology to ultimately impact revenue and profit.

We will get a small insight to recent and future developments when Yahoo earnings are announced on Tuesday the 15th of July (Google earnings to follow on Thursday the same week).

 

 

 

 

One thought on “What is next for Yahoo? – Acquisition spree continues

  1. Pingback: Yahoo Financials – Advertising declines, new deal with Alibaba | The Tech Globe

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