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Yahoo! (YHOO) A New Beginning

Yahoo! (YHOO) A New Beginning

Yahoo! Reaches (another) huge milestone with its five year, Mozilla Firefox deal. If you are unaware, Firefox is one of the most popular web browser on the internet.

According to Wikipedia, as of February 2014, Firefox has between 12% and 22% of worldwide usage, making it, per different sources, the third most popular web browser. According to Mozilla, Firefox counts over 450 million users around the world. The browser has had particular success in Indonesia, Iran, Germany, and Poland, where it is the most popular browser with 55%, 46%,43%,and 41% of the market share, respectively.

These are extremely large numbers, and while Firefox doesn’t boast the amount of users that say Facebook has, they can definitely say that most of their users are real people, not like Twitter or Facebook.

yhoo-plus-firefox-deal

Why is this significant?

Back at the end of 2011 Google (GOOG) struck a 3 year, $300 million deal with Mozilla, Firefox’s parent company, where Google.com would be the web browsers default search engine. That’s nearly a $Billion! This means that people installing Firefox, that do not change their preferences, automatically use Google.com for searching the internet. As you know, Google’s success comes from the amount of web traffic it receives on its search engine. Keep in mind that Google.com has been the default search provider for Firefox since 2004. How much impact did this have on Google’s growth?

At the time, Yahoo actually had the opportunity to become the default search provider, but deemed the deal to be to “costly”. Back then Yahoo had some fairly large internal problems that lead to business problems. But in 2012 Marissa Meyer was introduced as the new Yahoo CEO. And she had some aggressive plans for her vision of the company. We wrote about this in a previous article “Could Yahoo (YHOO) Be Stock Of The Year?

And because Yahoo search is run by Microsoft’s (MSFT) Bing, this also is a big positive for MSFT. We wrote about Microsoft being a great dividend stock in a previous article.

What was the effect of this new deal for Yahoo?

Check out the stock charts based on percentage leading up to this deal:
Charts:

goog vs yhoo

Let' compare GOOG, MSFT and YHOO:

goog vs yhoo vs msft
Does this look as if someone had some fore knowledge?

So far Yahoo Search has seen a jump from 9% to 29% of Firefox users in just two weeks.

firefox yahoo

“Firefox 34 is still being rolled out so its usage is currently quite low. It will be interesting to see how this develops,” commented Aodhan Cullen, CEO, StatCounter. “At the moment the change is having a negligible impact on overall search share in the US, but if this early usage trend on Firefox 34 continues then Yahoo could be on course to gain a number of percentage points.”

A good way to keep an eye on your investment in this area is watching the search market share numbers. Also, all players know the importance of the mobile user. This a huge area of focus for Google. Mobile is definitely something you want to keep your eye on.

So what can we take away from this?

When you invest in a company, you are really investing in its management too. Before Yahoo’s CEO Marissa Meyer came on board, the future of the company was very up in the air. But since then, the company has been making some huge strides to make itself viable again. You can attribute this to the leadership of the company.

Of course, this is just my humble opinion, and you should definitely do your own research. But, its good food for thought.

Interesting note about Yahoo!.

Yahoo owns a large stake in Ali Baba (BABA) which had its IPO recently. Cash from this holding could be used to expand, in fact this may have been one of the influencers to cut the Firefox deal.

According to a Forbes article here, Yahoo is being encouraged to form a deal with AOL which owns the wildly popular Huffington Post.
“While we do not know what will happen next, we continue to see Yahoo as notably undervalued,” says Scott Kessler, senior equity analyst at S&P Capital IQ, who recommends Yahoo as a buy with a 12-month price target of $50 share. He says a turnaround at Yahoo is, indeed possible “given new management and an emphasis on growth.”

And with that, in a pathetic attempt to get you to share my stuff, I have included a picture of Stock Market Kitty for you.

stock-market-kitty

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Written by John Thomas

I began my investing career back in 1998. I quickly discovered day trading, small cap and penny stocks. I was the editor of my own investment newsletter, stock promoter, investor relations, public relations and have witnessed the back-end process of taking a private company public through reverse merger and registration. That is roughly over a decade in a nutshell. During this time I learned how to identify the rats, sharks and people who truly want to help you learn about investing. Now I do research and write.
My hope is to pass along nuggets of information that could help or the very least entertain you on your way to financial success.

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