Earnings: YHOO: Semel Promises; Panama Launches; Social Media Delivers


Yahoo Chairman & CEO Terry Semel didn’t exactly say “please, sir, may I have another” during Tuesday’s lengthy earnings call but he did start the conversation with a quasi act of contrition. “Let me begin by telling you that while we are very excited about a number of things happening at Yahoo, I am not satifised with our current financial performance and we intend to improve it. … To be clear, we are continuing to grow our business at a pace many companies would envy, and we continue to lead the industry in key measures of performance — but that is really not good enough for us. We are not exploiting our considerable strengths as well as we should be and we are committed to doing better.” Shorthand: We think we should get credit for what we’re doing right but we know we’re getting skunked and we don’t like it any better than you do.
So what is Yahoo doing?
Emphasizing action in advertising from acquiring and investing in ad solutions to announcing that the much-delayed search ad platform known as the Panama project went live Tuesday in the U.S. Panama’s marketplace design doesn’t go live until 1Q07, though, so no income until next year. Still, it’s a sign of progress that helped send the stock up after a post-market dip based on lower 4Q06 guidance. For now, most of the ad eggs remain in the graphical advertising business — “outperformed the segment but the gap narrowed” — which is where the investment in Right Media comes. Ditto for the eBay deal, which is slated to kick in during 1H07 and a deal with Telemundo, both of which expand ad inventory.
Improving the portal: The redesign of the front page — “already the most visited page on the web” — brought increases in total unique visitors, page views, minutes spent, and average usage days per visitor.
Investing: Semel: “We believe now is the time to make investments in new audiences and new ways to engage them to ultimately build new revenue opportunities. We plan to further invest, innovate and secure leading positions in the areas where we see the biggest growth opportunities — in social media, video, and mobile access.”
Stressing social media: Semel: “Yahoo has been a pioneer in social media. It is a long-term focus of ours, and we are a far bigger player in this space than many people actually realize.” That investment starts with having the “foresight” to acquire Flickr in 2005; Flickr has some 20 million users a month. Together, Semel said, Yahoo Answers, Flickr, del-icio.us, and Yahoo Video account for nearly 100 million users. “Importantly, and boy have I read about this, within this group is the largest community of the prized 15- to 24-year old youth demographic on the web, which stands at Yahoo! at approximately 30 million.” COO Dan Rosensweig said the company knows there will be a social media ad glut “for a while” but that Yahoo’s user data, audience quality “which I think is debatable in some of these other environments” plus contextually relevant ads give it an edge.
Expanding video: Yahoo recently acquired video editing site Jumpcut and is busy making video content deals from Current TV to CBS local news. It’s also producing its own “contextual relevant video.”
Expanding mobile reach: A Java version of Yahoo Go is dur early next year; the target is to have Go and other Yahoo services on the majority of mobile phones globally.
Like I said, a lengthy call. You can catch the rest in the transcript from SeekingAlpha.com. Our earnings report is here.

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