nasdaq: yhoo 2/28/2012 turner novak mark blazo. buy 100 shares @ $21.31 $2,131 4.71% of portfolio
TRANSCRIPT
NASDAQ: YHOO2/28/2012
Turner NovakMark 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 TeamCEO - 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 TeamCFO - 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 TeamVP 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
• 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
Core Business21.44 x 29.6% = $6.35 per share
13.2 11.7 3.1 + 1.629.6%
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
• 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?
Investment Thesis
• Buy 100 shares @ $21.31 • $2,131• 4.71% of portfolio