What About Investing For The Long Term In Yahoo! Inc.?

What About Investing For The Long Term In Yahoo

Yahoo, representing the internet information providers’ industry, was founded in 1994 by Stanford Ph.D. students David Filo and Jerry Yang. Since then it has evolved in an American multinational internet corporation headquartered in California. Yahoo is known for its web portal, search engine Yahoo! Search and other many related services.

Yahoo’s market capitalization is $28.51 billion with 11.700 employees. Its main competitors are AOL with a market capitalization of $2.80 billion and Google with $289.74 billion in market capitalization. What have been interesting about this company are its latest and frequent acquisitions. Starting with May 2012, we may observe 11 acquisitions made. Almost the same pace of purchasing start-ups with huge potential is found at Amazon and Google with 7 acquisitions each in the last year, and Facebook with 9 purchases for the same period of time.

The companies purchased by Yahoo are the following: OntheAIR, Snip.it, alike, Jybe, Summly, Astrid, GoPollGo, MileWise, Loki Studios, Tumblr and PlayerScale. What all these services have in common? They are trying to provide the best communication channels, innovative ways to ease human’s activities, new ways to organize our days and interesting sources of entertainment. Moreover, 10 of these acquisitions have in common Marissa Mayer as CEO and have been bought since the beginning of 2013. If we look at Google, former workplace of Marissa Mayer, it owns assets like Gmail and YouTube which are enormously valuable speaking about traffic generated and online ads sold. One of the latest acquisition of Yahoo is Tumnblr, which is a powerful tool with 55 million bloggers and 300 million visitors per month, possibly stealing users from Google and Facebook. There are voices saying that Yahoo is prepared for even bigger acquisitions as Hulu, Zynga and Daily Motion. It looks like Marissa Mayer is ready to go further with these acquisitions. All these actions are part of the plan that is intended to make Yahoo a leader in the internet information providers’ industry.

Furthermore, what is the meaning of buying a startup? May this action eventually lead to an extraordinary investment idea? Some more of you may say yes, as I tend to answer this question. Because startups are small companies designed to grow fast, they are characterized by fully dedicated people with innovative ideas that can lead to the creation of remarkable products and services. Big companies have recently added on their investment portfolio the buying of startups, as the examples cited above. Also, outstanding examples of startups are Skype (initially acquired by eBay for $2.5 billion, 65 % of Skype being bought for $1.9 billion in 2009 and in 2011 Microsoft acquired Skype Communications for $8.5 billion) and PayPal (acquired by eBay for $1.5 billion 2002).

If you are really thinking about investing in Yahoo, then you need to know that it is part of 10 indices and is traded on the NASDAQ stock market.

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