Mobile, mobile, mobile.
And lest investors miss a point that was driven home with sledgehammer-like subtlety during Yahoo’s earnings call on Tuesday, CEO Marissa Mayer made it clear that the teetering internet portal is pinning its hopes for a turnaround on the rise of tablets and smartphones.
“Yahoo’s future is mobile,” Mayer said. “The consumer internet is going through a massive platform shift to mobile right now,” she added.
Are you following?
Mayer, a former Google executive who has been a Wall Street favorite since taking over at Yahoo last year, said that there are expected to be 2 billion internet-connected mobile devices by 2014 and that the number of these portable gadgets is projected to double by 2017.
That may be good news for web advertising too. Even though some analysts expect internet companies to take a hit when they move from display ads to mobile spots, Mayer said early tests show that ads that are specifically designed for the mobile platform may out-perform traditional display ads on desktop. At the very least, ads designed specifically for the parameters of a phone or tablet are more lucrative that display ads that are simply shrunk down to fit the smaller screen.
Overall, Yahoo’s third quarter earnings were a mixed bag, as both profits and revenues dipped. However, that drop was in line with Wall Street’s projections and investors were pleased to hear that Yahoo will keep a greater stake in Alibaba than it had previously expected to when the Chinese e-commerce giant goes public. Alibaba is expected to be valued at as much as $120 billion when it debuts — that’s good news for Yahoo, which owns a 23 percent stake in the company.
Shares of Yahoo rose slightly in after-hours trading.
To help Yahoo execute its mobile strategy, the company has hired 1,000 engineers to design its apps and mobile products. As of last quarter, the company reported that nearly half of its 800 million monthly users came from mobile.
The company declined to say what percentage of its overall revenue came from mobile, although Goldman said he expected Yahoo would be “more quantitative” about its mobile sales in 2014. For now, he said the focus has been on staffing up and laying the groundwork.
“I would say [mobile] is growing quite rapidly, so it is one of the growth drivers at the company,” CFO Ken Goldman said.
Yahoo also declined to give many specifics about progress at Tumblr, the micro-blogging site it plunked down $1.1 billion to acquire in June. Goldman said that for the time being Tumblr is focused on increasing its user base and particularly the number of — wait for it! — mobile users. It is projected to begin contributing to Yahoo’s EBITDA in 2014.
“We remain every bit as confidant about that merger-acquisition today as we were when we did it,” Goldman said.