Here's What Analysts Should Be Asking About at Yahoo's Investor Day: The Microsoft Search Deal (And No Silver Bullets)
This morning, Yahoo is holding its annual investor day at its Silicon Valley HQ, starring CEO Carol Bartz and a panoply of top execs at the Internet giant.
While this kind of dog-and-pony show is typical for companies–an effort to get all chummy with institutional investors and financial analysts and convince them that there is a grand scheme for the road ahead–what’s really at stake is the need to cover over problems and play up the prettier parts.
That’s why–after a period of rather fallow deal activity–Yahoo (YHOO) suddenly started pulling out the shiny objects just last week, designed, in part, to show that Yahoo is on the move and pushing vigorously forward.
We have a plan, folks! Silver bullets all around!
That included its acquisition of both social media start-up Associated Content and Koprol, a social location service in Asia, as well as a big, noisy partnership with mobile handset giant Nokia (NOK) related to email and maps.
But while those are all well and good, they will have almost zero impact on Yahoo until they get revved up and results can be judged.
Thus, it’s probably more helpful for those in analog attendance–the press was not invited as we are apparently considered akin to skunks at a garden party–to focus on some key issues that are present and accounted for right now and to grill Yahoo about them.
To be fair, Yahoo is planning on covering the most important of these at the moment: The status of its partnership deal with Microsoft (MSFT), related to search and online advertising.
It will be interesting to see what advertising operations exec Mark Morrissey, the Yahoo-side integration lead, has to say about it all and what impact the company expects from it.
Some key questions that need asking:
How soon does it roll out–late this year or early next year?
How does Yahoo get search share up–via improvements to its homepage and user experience–to make this as lucrative as possible?
Will the deal, which is intended to result in bigger search-query volume, finally bring a key metric–revenue per search–up, especially after the Microsoft RPS guarantees run out in 18 months?
Do the cost savings of letting Microsoft’s Bing power Yahoo search compensate for trading away control of a key source of income and revenue?
And perhaps most of all, will any of this put a dent in the overwhelming search dominance of Google (GOOG)?
Here’s a really good analysis by Citigroup’s Mark Mahaney on this very subject, with lots of nice numbers to chew over:
Of course, there are a lot of other thing to look at, such as:
The continuing issue around the talent drain (Yahoo is smart to trot out lively new Chief Products dude Blake Irving, formerly of Microsoft, to counter the drip-leak-of-execs issue), an explanation of its penny-ante (but pricey) marketing efforts so far, a report on what’s most innovative in its oft-clogged product pipeline, a detailed assessment of the online display market and thoughts on increased competition in this key Yahoo arena from Google. Also: What’s up with mobile?
Also, as Yahoo notes on its Welcome page for the event: “Everything you’ll hear today–from looking back at what we’ve done to looking ahead at the incredible opportunities we’re tackling–add up to one thing: creating shareholder value.”
So analysts, let’s don’t forget about the stock price, which has stubbornly stuck in the $15 range for a long time now.
In fact, it is now almost the exact same price as it was one year ago and 75 cents lower than at its last investor day in late October last year.
Yes, definitely ask about that.