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4/20/2006
  Yahoo Earnings Call

Before Google's results come out, here's a couple quick points on Yahoo's

  1. YSM! / Overture is really screwing up big time.

    Semel has said his advertising business has two "brilliant children" (display + search). One of those is currently failing kindergarten, however.

    Overture's lateness in copying Google's AdWords model is costing Yahoo a ton. They've been working on a revamp to the original Overture system for about 2 years. This is a subsidiary of Yahoo that has over 2,000 employees.

    On this call, Semel has to admit that they are getting their ass kicked in paid search and he spends 5 minutes to offer additional caveats about how slow the rollout will be. This shouts how badly the Overture team is performing. I can hardly imagine how happy Semel must be about this.

  2. Luckily for Yahoo, graphical display advertising (targeted banners) is killing their numbers.

  3. Terry Semel's opening statement on the conf call was full of intimation about how Yahoo is better than Google.

    I think this set of rationalizations implicitily dinging Google is just odd. Yahoo is getting killed by Google head-to-head. Here are some of the odd points Semel points too:

    • Yahoo being chosen for a technical excellence award by PCMag or somesuch - highlighting innovation - i.e. Yahoo is more techie, and ostensibly bigger than Google.
    • Yahoo is big in Japan. #1 in search in Japan and Taiwan... (China - not so much )
    • Time spent on the web - Yahoo has the largest share.
    • Yahoo has 50% reach on the web.

    What do these points add up to - other than Semel's got a Google chip on his shoulder?

  4. Henry Blodget has a good post that shows that Yahoo's margin is declining by about 3 points.

Interestingly, CFO Susan Decker gives a one-time smack-down to 3rd party search traffic statistics providers. She says Yahoo's search query traffic has been growing 15-20% each quarter for the last 3 quarters - contrary to what's been widely reported.

Schoolmarm-ishly, she says she's not gonna repeat this info every quarter. As I've argued before, the comScore's and Nielsens of the world are not really tracking what the big players are really seeing traffic wise.

Summary: Yahoo has a lot of good stuff going for it - primarily a dominant Mail platform, and a unique targeted display advertising model with huge volume. Imagine how strong things would be if they could fix their paid search problems. The hour is late, however.

Let's see how Google does later today.

 


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