Yahoo! Inc. Overview of its business model, value proposition and projected financial forecast.
Yahoo! Inc.
Overview of the company’s business model, value proposition and projected financial forecast.
Introduction
Yahoo! Inc. is a global US Internet Corporation, founded in California in 1994, which provides a range of products and content, including email, media streaming and downloads. Surviving the dot.com crash in 2001, Yahoo concentrated on pursuing partnerships with telecoms and internet providers to compete with AOL, they acquired smaller search engines and built their own technology to control the search results. There were various merger discussions held between Yahoo and Microsoft over the course of 2005-2007, however all attempts to form a merger were unsuccessful. The company had maintained it’s value proposition from 2005-2009 as one of the market leaders in search, it had healthy top line growth however it suffered from falling profits, web traffic and share price and this resulted in the appointment of their new CEO, Marissa Mayer in 2012.
This essay will examine Yahoo’s business model, it’s value proposition and attempt to forecast its future financial performance based on ability to generate future revenues, drive traffic to it’s properties and investors’ confidence in Mayer’s strategy for the remainder of 2013.
Business Model
Yahoo business model is primarily a two-sided business model. According to Evans & Schmalensee (2005), this business model is where firms act as platforms and sell two different products to two different groups of buyers taking into account that demand from one group of buyers depends on demand from the other group of buyers, while buyers of the two groups do not take this indirect network effects into account, so that these are in fact externalities for buyers.
According to Wely (2010), three key characteristics of two-sided markets are; (1) price discrimination between two distinct groups of users, (2) cross network effects between market sides and (3) bilateral
Overview of the company’s business model, value proposition and projected financial forecast.
Introduction
Yahoo! Inc. is a global US Internet Corporation, founded in California in 1994, which provides a range of products and content, including email, media streaming and downloads. Surviving the dot.com crash in 2001, Yahoo concentrated on pursuing partnerships with telecoms and internet providers to compete with AOL, they acquired smaller search engines and built their own technology to control the search results. There were various merger discussions held between Yahoo and Microsoft over the course of 2005-2007, however all attempts to form a merger were unsuccessful. The company had maintained it’s value proposition from 2005-2009 as one of the market leaders in search, it had healthy top line growth however it suffered from falling profits, web traffic and share price and this resulted in the appointment of their new CEO, Marissa Mayer in 2012.
This essay will examine Yahoo’s business model, it’s value proposition and attempt to forecast its future financial performance based on ability to generate future revenues, drive traffic to it’s properties and investors’ confidence in Mayer’s strategy for the remainder of 2013.
Business Model
Yahoo business model is primarily a two-sided business model. According to Evans & Schmalensee (2005), this business model is where firms act as platforms and sell two different products to two different groups of buyers taking into account that demand from one group of buyers depends on demand from the other group of buyers, while buyers of the two groups do not take this indirect network effects into account, so that these are in fact externalities for buyers.
According to Wely (2010), three key characteristics of two-sided markets are; (1) price discrimination between two distinct groups of users, (2) cross network effects between market sides and (3) bilateral
References: Ankeny, J. (2013), “Yahoo tops 340m monthly mobile users, suffers Q2 revenue decline” Fiercemobilecontent.com Chaey, C. (2013) “Marissa Mayer: Yahoo will crack out a dozen products that fix “digital daily habits”. FastCompany.com Evans, D. & Schmalensee, R. (2005), “The Industrial Organisation of Markets with Two-Sided Platforms,” NBER Working Papers, National Bureau of Economic Research, Inc. Juliet Garside (2013). "Google overtaken by Yahoo! in US website visitors for first time in two years". The Guardian. Larson, S. “With 800 Million Monthly Users, Yahoo CEO Touts Turnaround in Growth”, (2013) .ReadWrite.com Mayer, M. (2013) YAHOO! Q2’13 FINANCIAL HIGHLIGHTS Stone, B. (2013)“Can Mayer save Yahoo” .Bloomberg Businessweek Weyl, E. Glen (2010), "A Price Theory of Multi-sided Platforms". American Economic Review Yahoo company profile. Crunchbase.com Yarow, J. (2013) “Apple makes Yahoo’s pretty good weather app totally obsolete”, . BusinessInsider.com