Yahoo: We're still number one!

Yahoo CEO Terry Semel began the Yahoo Q#3 investor conference call yesterday by saying "we are very excited about a number of things happening at Yahoo," (see "Semel on Yahoo: We lead in social media" but his exictement was not palpable; He had a cough and sounded tired. No wonder, the bottom line financial report was not exciting:

Our results for the third quarter fell short of our initial expectations, and we are lowering our fourth quarter business outlook as well. 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.

Semel's conference call presentation included Yahoo usage metrics, but not the full panaopolie he generally touts. In "Yahoo vs. Google: Where is the underdog," after Yahoo's Q2 earnings conference call, I cited Semel discussing Yahoo’s competitive advantage from “the largest and most engaged audience on the Web,”:

more than 0.5 billion monthly users on Yahoo! branded Web properties. Excluding Yahoo! Japan and China, we delivered approximately 412 million unique users, up 28% year-over-year from approximately 321 million, and up from 402 million last quarter. On the same basis, our active registered user number was approximately 208 million, up 20% from 174 million in the second quarter of last year and in line with the previous quarter.

What’s really exciting to me is that we have the highest share of time spent on the Internet in the US, and Yahoo! is the only company among all of our competitors that has grown minutes per visitor each quarter during the last year. Our user and engagement numbers positively impact all parts of our business, including Premium Services, which of course you know is our paying subscribers, who are the fastest-growing subset of users on the Yahoo! network. We ended the quarter with approximately 14.3 million unique paying relationships, up 1 million from the previous quarter, and approximately 4.2 million, or more than 40%, year over year.

Yesterday, Semel acknowledged it is time to "unlock the full potential of our large global user base."

we continue to create the most coveted guaranteed inventory on the web. For example, our recently redesigned homepage, which was already the most visited page on the web, has resulted in significantly improved user engagement and satisfaction, with increases in total unique visitors, page views, minutes spent, and average usage days per visitor.

These initiatives will help ensure that Yahoo! continues to be the first and most attractive choice for graphical advertisers and will position us to widen the gap with our competitors.

Yahoo! is also the first and most attractive choice for consumers, and we want to stay that way.

Yahoo knows its "leadership" is being tested. Semel said:

The market is going through a significant transition with new forms of inventory becoming available from a range of new and established competitors. Near-term, we are expecting our growth to be in line with the overall market. Importantly, that is from a much, much higher base. Still, that is not where we should be with the superior value we provide to advertisers.

Daniel Rosensweig, Chief Operating Officer, on the leadership "plan," going forward:

talk about the inventory glut. It has definitely been a huge change. You can see from the page views of a lot of the social media sites that exist today. That is going to change the market dynamics. What we hope is that it is going to bring in whole new categories of advertisers who have been focused mostly on the search side to be able to bring them to the other side of the kinds of advertising that is capable.

From our standpoint, we want to be able to take advantage of that marketplace. We think we can continue to build our premium environments by continuing to have the highest rate of growth, the highest targeting, most engaged audiences. But there are many new players and there are alternatives in the market, so what we have to do is continue to adjust and evolve to take advantage of those and to build packaging that marketers cannot get elsewhere.

From our standpoint, we are going to move ahead as the market leader and better position ourselves to take advantage of this new inventory and this new market opportunity. We have products like Answers. We have products like Flickr that are not yet really monetized right now. But we have assets that nobody else has and we plan to leverage those assets, so those assets are not only the quality of our audience, which I think is debatable in some of these other environments, but our targeting capability of not only the environments that they are in, but our profiles of being able to know who they are and that is why our large registered audience base, which continues to grow, is becoming so important.

That user data about who they are and what they have done, and to be able to put ads in different formats and different kinds of buying capabilities into the contextually relevant environment. Of course, we do have we believe the world’s best sales team, who has the best relationships to be able to help shepherd the large marketers into this marketplace.

I think there is going to be a glut for a while. I think there will be a transition for a while, but I think in the end, our assets and our leadership will ultimately help us take the greatest amount of advantage of that opportunity.