Short answer: Yahoo is a cash-generating monster and a long term winner.
Shorter (term) answer: not good enough.
From CBS News' nice wrap-up of the Yahoo Q4 earnings:
Revenue for the quarter totaled $1.5 billion, a 39 percent increase from $1.08 billion in the comparable 2004 period.After subtracting the advertising commissions that Yahoo paid to other Web sites, the company's fourth-quarter revenue stood at $1.07 billion, in line with analyst estimates
Yahoo has 429 million unique users, more than 200 million active users and 12.6 million unique paid relationships with users who subscribe to online music and other services, Chief Executive Terry Semel said in a teleconference with analysts. "This year we are poised to surpass 15 million paying relationships"
And this honest admission from Terry Semel:
"Frankly, Google has done a better job than us," Yahoo Chairman Terry Semel acknowledged during a Tuesday interview.
Maybe if Yahoo execs spent less time listening to Hollywood producers pitch online reality shows, and more time kicking the underachievers at Overture in the pants...
Semel has been promising to introduce improved advertising algorithms later this year, a pledge he reiterated Tuesday. But he stressed it will be a gradual process that's unlikely to have a significant impact on Yahoo's earnings until 2007.
So Overture is targeting 2007 to get its ad system up-to-par with Google! What have they been doing for the last 18 months!? Terry should send Kevin Sites into that Hot Zone and find out!
And my prediction about Google's dominance being enhanced by the splintering of MSN inventory away from Yahoo Search is spelled out in financial terms here:
In 2006, Yahoo expects to lose about $120 million in ad revenue from affiliates, mostly due to Microsoft's MSN planned move to its own ad network in June, Decker said. MSN's revenue contribution is expected to drop from $75 million to $25 million for the first half of 2006
In other news, Lloyd Braun is still at Yahoo...
¶ 1/17/2006
(Yahoo's full conference call transcript is up on the Internet Stock Blog at http://internetstockblog.com/article/5871 .) BTW, these guys are also going to publish the Google transcript within 6 hours of the end of the call, and the blurb at the bottom of the transcript allows you to quote up to 400 words as long as you link back.
Q - Ben Schachter
Hi guys, just talk about the partners you have in YPN network and specifically refer to the domain parking business. Just wondering if you are happy with the quality of the partners there? And also with the YPN, will you enable advertisers to show virtual media ad, non-text ads there? And also will it be PPC or also impression-based? Thanks.
A - Daniel Rosensweig
Okay, this is Dan. I’ve answered most of that. On the YPN partners obviously as Terry mentioned the size of it is, it’s a very deliberate rollout where we want to pick the partners, we want to learn how to master traffic correctly, we want to get the click through rates right; we want to get the advertisers to be able to get into the network correctly. So, we are taking very deliberate steps in that and so the quality of the network will be as high as our normal quality as, as the network scales and gets larger. So, for the moment, we are learning a lot about the different kinds of partners, different sources of traffic, so we expected to be a super high quality network, like we’ve done before. ..."
Translation:
We know YPN that is an inferior product to Google AdSense, but we hope that by going slow, we can wait until AdSense is taken out by click fraud - and hope to have some chance to be competitive at that point.
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