Yahoo (YHOO) was held back from the exponential growth in social networking took hold over the last few years. The company is all too aware that Facebook (FB) and Zynga (ZNGA) captured the minutes spent on social networking sites in the last few years, and Zynga games grew in popularity while Yahoo games faded away.
Yet there is still hope for Yahoo: The dominant hold for Facebook on the desktop side has begun to fade. In August comScore reported that month-over-month minutes spent on the social networking site declined 5%. Mobile usage increased 3%, while desktop usage dropped a substantial 13%. Compared to last year, ad impressions dropped 2%.
Meanwhile, good things are happening for Yahoo, which is working to maximize shareholder value. And good things happen for shareholders when shareholders are considered. Consider AOL, Inc. (AOL). The company monetized its patent portfolio and returned cash to shareholders. Shares are up 129.21% year-to-date, and up 190% for the year.
Yahoo Valuation Improving
1. Yahoo plans to return most of the proceeds gained from the China holding, Alibaba, to investors. After the cash is returned, Yahoo will still have over $3 billion in cash.
2. Yahoo hired an ex-Google executive, Marissa Mayer. She set a goal for yahoo to have a strong position in mobile by 2015.
3. Mayer will only approve projects that obtain 100 million users or generate $100 million in revenue.
4. Yahoo will work under increased transparency, attach measurable results to employee project activities
5. Future acquisitions will need to be accretive to the core businesses, otherwise they will not be approved.
Business Section: Investing Ideas
Do you consider Yahoo a turnaround investment? Do patent holders have value not being recognized by the market?
Companies holding patents valued by investors are:
1. InterDigital, Inc. (IDCC, Earnings, Analysts, Financials): Engages in the design and development of digital wireless technology solutions. Market cap at $1.57B, most recent closing price at $36.91. InterDigital will be added to the S&P MidCap 400 on September 28 2012.
2. AOL, Inc. (AOL, Earnings, Analysts, Financials): Operates as a Web services company that offers a suite of brands and offerings for the worldwide audience. Market cap at $3.25B, most recent closing price at $34.61.
3. Rambus Inc. (RMBS, Earnings, Analysts, Financials): Engages in the creation, design, development, and licensing of patented innovations, technologies, and architectures to digital electronics products and systems. Market cap at $586.71M, most recent closing price at $5.30. Hynix was found by a federal district court for infringing on Rambus’ patents.
Microsoft’s BING search engine poweres Yahoo search.
4. Microsoft Corporation (MSFT, Earnings, Analysts, Financials): Develops, licenses, and supports a range of software products and services for various computing devices worldwide. Market cap at $252.84B, most recent closing price at $30.16.
Below is a chart of Yahoo. Shares appear to be range-bound, peaking at $16. If the new CEO leadership results in tools that offer a better user-experience and that also points to mobile growth usage, Yahoo will break-out of its range:
Written by Chris Lau. To interact and discuss these picks with users, attach your watch list or portfolio to your friends on Kapitall. Message the author. He is ranked sixth (by points) on the all-time leaderboard. The leaderboard is located on your score icon -> Leaderboard. Members on Kapitall earn free points, and even more points with every Kapitall Generation trade. These points may be redeemed for goods at the Kapitall store.
Analyze These Ideas: Getting Started
- Read descriptions for all companies mentioned
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Dig Deeper: Access Company Snapshots, Charts, Filings
- InterDigital, Inc. (IDCC, Chart, Download SEC Filings)
- AOL, Inc. (AOL, Chart, Download SEC Filings)
- Rambus Inc. (RMBS, Chart, Download SEC Filings)
- Microsoft Corporation (MSFT, Chart, Download SEC Filings)
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