Yahoo: Executing for shareholder value

Yahoo confident in 2007 initiatives.

A confident Terry Semel, CEO Yahoo, presented his company’s Q4 2006 results to Wall Street yesterday. Semel’s principal message: Yahoo is on track to deliver increased shareholder value in 2007 and beyond.

Semel began with Yahoo objectives announced at the Q3 earnings call:

To improve search monetization.
To widen our lead in graphical advertising.
To seize the opportunity in emerging areas such as social media, video and mobile.

Semel assured Yahoo is “aggressively executing against these three key priorities” and put forth the “tangible progress” Yahoo has made.

SEMEL ON SEARCH MONETIZATION

We have successfully transitioned the large majority of our revenue to our new search marketing system known as Project Panama. We will continue to send invitations to U.S. advertisers to upgrade to the new system throughout the remainder of the first quarter and anticipate that all U.S. advertisers will have transitioned by the end of this quarter. We will officially launch our new ranking model in the U.S. on February 5th.

This means as of February 5th, all U.S. Yahoo search marketing ads will be ranked by quality in addition to keyword bid price. Ads with a higher quality should receive better placement on the results pages….creating a more valuable marketplace for users, advertisers and publishers, unlocking the full potential of Yahoo's search marketing network.

We expect to see the revenue impact of the new search advertising system and ranking model to begin in the second quarter and gain momentum throughout 2007 and beyond.

SEMEL ON DISPLAY ADVERTISING

For the quarter and for the year, we believe that we once again outperformed the marketplace, notwithstanding that we already have the largest display advertising business. Because we are well-positioned to develop greater context and relevance for consumers and advertisers, our aim is to outpace the industry again in 2007.

Revenue from our top 200 U.S. display advertisers grew nearly 30% in this past quarter. With respect to our categories, growth in the quarter was broad-based. However, highlights included consumer package goods, financial services and pharmaceuticals which all delivered strong year end, year-over-year growth.

SEMEL ON SOCIAL MEDIA, VIDEO & MOBILE

Yahoo Answers has become the largest collection of human knowledge on the web in just over a year since its initial launch, having now grown to almost 75 million unique monthly users worldwide.

We are also making important acquisitions in this area that we believe will, over time, further enhance our position. We have agreed to acquire Bics.com which is an engaging contest platform and acquired MyBlogLog, an innovative service that is going to change the way publishers connect to their audience, and even the way people connect to each other.

In the video area, during the quarter, we signed over a dozen video, news, information and entertainment relationships across our media sites, including the BBC, FOX News, ABC News, the Food Network and the CW network.

Mobile also continues to be a major focus for Yahoo! with the launch of several key new products and strategic partnerships. We announced the beta launch of Yahoo Go For Mobile 2.0 and partnerships with Motorola, Nokia, Samsung and RIMM. Yahoo Go 2.0 is available on 70 devices today and we are working to bring it to more than 400 devices by the end of this year.

One Search will be a key feature on Apple's iPhone, along with Yahoo Mail, and will be used exclusively in Opera, which is a leading provider for web browsers for mobile phones.

SEMEL ON YAHOO'S FUTURE 

Semel concluded by underscoring Yahoo is “on the right path to deliver long-term shareholder value”:

The future opportunity for Yahoo and the industry as a whole is bigger than ever. The Internet is evolving at a rapid pace, projected with some 800 million more users expected to come online by 2010 and online advertising predicted to grow to $55 billion by the same year.

We did a lot in 2006 to position the company for continued success in a rapidly evolving Internet marketplace. While we will continue our transition in 2007, we are clear about our objectives and what we need to do to accomplish our goals.

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