Yahoo! wants to spread some cheer to Internet users around the world. Its network of websites offers news, entertainment, and shopping, as well as search results powered by Microsoft's Bing. Yahoo! generates most of its revenue through providing search and display advertising to Web operations in three categories: Communications & Communities (including Yahoo! Mail, Yahoo! Groups, and Flickr), Search and Marketplaces (Yahoo! Search), and Media (Yahoo! Homepage, Yahoo! Finance). Other revenues come from fee-based services such as premium e-mail; royalties, licenses, and mobile products; and broadband Internet access.
Yahoo! publishes content in about 45 languages and in 60 countries, regions, and territories.
Business outside the Americas accounts for about quarter of revenue, but much of the company's total value comes from its Asian assets, worth around $17 billion. This includes Yahoo!'s 35% stake in Yahoo! Japan.
Yahoo! received about 38% of its revenues from search services in fiscal 2012, which it provides through an arrangement with Microsoft. The company is halfway through the 10-year partnership with the software giant. As part of the agreement, Microsoft's Bing search engine is the search provider on Yahoo!'s websites. In addition, Yahoo! handles sales of search ads for both companies, and the two firms share search revenue.
Sales and Marketing
The company maintains three primary channels for selling its advertising services: field, mid-market, and reseller/small business. Its field advertising sales team sells display advertising in all markets and search advertising services in non-transitioned markets to leading advertisers and agencies. Its field advertising team also sells search advertising to premium advertisers in transitioned markets. Its mid-market channel sells services to medium-sized businesses, while its reseller/small business channel enables it to sell advertising services to additional regional and small business advertisers. In 2013 Yahoo! reorganized its US sales force.
Yahoo! spent about $142 million on advertising during 2014.
The company's revenue ticked down 1% to $4.62 billion in 2014 from $4.68 billion in 2013. There was a 4% decrease in its display revenue due to a shift from premium ad units to lower monetizing native ad units. Also, advertising revenue on Yahoo Properties in the Americas, EMEA, and Asia Pacific regions fell in 2014.
Putting extra emphasis on the exclamation point in its name, Yahoo!'s net income was about 450% higher in 2014. The company posted a profit of $7.52 billion compared to a $1.37 billion profit in 2014. The company benefited from its share of Alibaba Group, which sold stock to the public in 2014.
Yahoo! is in the midst of a campaign to re-establish its relevancy in the face of fierce competition. A pioneer in Web search and navigation, Yahoo!'s collection of content and services made it an early leader in the Internet world, but Internet giant Google has since eclipsed Yahoo!, having gained nearly 65% of the US search market. (By comparison, Yahoo! has some 15% of global traffic.) In addition, Yahoo! faces competition from younger social network stars Facebook and Twitter, which have become the dominant services for online communication and information sharing.
Yahoo! is investing in mobile, video, native advertising, and social media to catch up to its rivals and it seems to be making progress. Those areas brought in about $1.1 billion in 2014.
The company has even moved to regain a foothold in the search business. It signed a deal to make Yahoo! the default search engine for the Firefox browser. Although the company sold its search technology to Microsoft as part of its deal to use Microsoft's Bing, Yahoo! retained some rights to its search engine.
For future growth, Yahoo! is pushing for original video content, as well as technology that will drive more ad revenues. In 2015, it produced and ran a sixth season of Community, a show that had been on NBC, The company has been busy making a series of video content deals with well-known Hollywood producer talent, including Tom Hanks, Robert Redford, Bill Maher, and Ben Stiller.
In 2015 Yahoo! said that it would spin off its stake in Alibaba to create a new company. The new entity would include some Yahoo! businesses such as its Internet access business as well as the shares of Alibaba. The move shields Yahoo!'s shareholders from tax consequences.
Mergers and Acquisitions
Among its 2014 moves was Yahoo!'s acquisition of BrightRoll, a programmatic video advertising platform in the U.S. The acquisition makes Yahoo! the largest video advertising platform in the U.S.
In 2013 Yahoo! agreed to pay $1.1 billion for the Tumblr blogging site with more than 100 million users. Yahoo! is using the deal to fill a social networking hole and to avoid getting left behind as people’s online habits change. Among other 2013 acquisitions, Yahoo! also acquired mobile app maker Qwiki. Qwiki allows users to create videos in Apple's iPhone. The company paid about $50 million for Qwiki.