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  • flankenking flankenking Apr 28, 2013 2:51 AM Flag

    Which Is the Best Internet Bet? Local Corp Is the Best Internet Bet

    Which Is the Best Internet Bet?

    By Mohsin Saeed - April 27, 2013

    Mohsin is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

    The Internet-advertisement industry is one of the fastest growing markets in the technology sector. With earnings season in full swing, investors can get an update on which companies are making headway in this space.

    Yahoo! (NASDAQ: YHOO) reported its first-quarter results in recent days. The company experienced an increase in profits but a 7% decline in revenue due to weaker revenue performance in Yahoo!'s core business. The entire company is undergoing a massive overhaul led by its new CEO Marissa Mayer, which has been met with positive investor sentiment. At current valuations, I believe Yahoo! has an upside of 30% and is value play for the US advertisement industry.

    The industry

    The US advertisement industry is one of the fastest-growing entities in the entire stock market. This huge industry has been supported by the rise in handheld devices, which ensure that users are connected to the Internet at all times. As compared to PC consumers stuck with bulky devices, which are much more difficult to carry around, handheld users can go online at any time.

    This single fact has significantly increased the amount of time that users spend online and is the primary reason behind the high expectations surrounding this industry. According to data collected by Reuters, the US Internet-advertisement market grew by 15% last year and currently stands at approximately $36.6 billion. More data from PWC reveals that the key to growth in this space is handheld devices with revenue from smartphones doubling last year.

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    • Consumer Properties Statistic of Local Corp
      .

      Monthly Uniqe Visitors. Over 30 million

      Monthly Page Views:: Approximal 50 million

      Page Views per Visit: 2.5 views in the average

      Impressions: 1.2 billion

      Click Through-Rate: Up to 8x more than Industry Standard

    • Yelp has only 96% of the Monthly Unique Visitors of Local Corp, but the 45-fold market-cap (Market-Cap of Local Corp = 38 million, Market-Cap of Yelp = 1,720 million)
      Local Corp development of Unique Visitors:

      11/2012: 18,745,842 Monthly Unique Visitors

      12/2012: 22,738,206 Monthly Unique Visitors

      01/2013: 26,410,927 Monthly Unique Visitors

      02/2013: 24,017,605 Monthly Unique Visitors

      03/2013: 24,427,755 Monthly Unique Visitors

      An increase of 22.63% year-over-year.

      Compare with the development of Yelp's Unique Visitors:

      11/2012: 19,358,705 Monthly Unique Visitors

      12/2012: 21,017,483 Monthly Unique Visitors

      01/2013: 22,293,301 Monthly Unique Visitors

      02/2013: 21,063,155 Monthly Unique Visitors

      03/2013: 23,364,095 Monthly Unique Visitors

      An increase of 14.94% year-over-year.

    • Local Corp is extreme undervalued by a compare

      The competition in the US-advertisement arena is getting pretty tough with Google (NASDAQ: GOOG) and Facebook (NASDAQ: FB) leading the way. Google currently holds the number-one position in the US advertisement industry with a market share of approximately 50%, followed by Facebook. Google has reported total US advertisement revenue of approximately $17 billion.

      The display-ads market is a different story, and is being led by Facebook, which has total revenue of $2.6 billion. Google is quickly catching up with Facebook in the display segment, as well, and some analysts expect that Google's market share will exceed that of Facebook by the end of 2014.

      Yahoo! is currently at the third position in the display segment and saw negative growth during the quarter. During the quarter, there was an 11% decline and 'ads sold' fell approximately 7% year-over-year.

      One of the major reasons for this performance was the redesign of the Yahoo! homepage and email, which meant that multiple engagement trends were redefined. The search revenue saw a slightly better quarter, with y-o-y growth of 6.5% (10% of the closure of Korean operations are excluded). There was a significant increase of 16% in paid clicks, but it was somewhat offset by a 7% decline in CPC.

      Facebook is currently my top pick in the Internet advertisement industry due to its mobile-monetization strength. Although Google has the Android OS on its side, the company has still not fully monetized its potential. Yahoo! will have to further improve its display segment growth if it wants to avoid revenue erosion by Facebook and Google.

      • 3 Replies to flankenking
      • Local Corp has only a P/E of 7.5
        Adjusted Net Income – Adjusted Net Income for 2013 is expected to be at least $5 million,

        Local Corporation Reports Preliminary First Quarter 2013 Results
        Company reports positive cash flow from operations one quarter earlier than forecasted

        Press Release: Local Corporation – Wed, Apr 3, 2013 7:30 AM
        IRVINE, Calif.--(BUSINESS WIRE)--

        Local Corporation (LOCM), a leading online local media company, today reported preliminary first quarter 2013 financial results.

        Based on preliminary results, the company reports first quarter revenue of approximately $21.7 million, up 4 percent from the prior quarter. In addition, the company reports positive cash provided by operating activities for the first quarter 2013, one quarter earlier than forecasted.

      • Local Corp development of Unique Visitors:
        11/2012: 18,745,842 Monthly Unique Visitors
        12/2012: 22,738,206 Monthly Unique Visitors
        01/2013: 26,410,927 Monthly Unique Visitors
        02/2013: 24,017,605 Monthly Unique Visitors
        Decrease of 9.06% (February has only 28 days against 31 in January) against January and an increase of 38.64% year-over-year
        Compare with the development of Yahoos’s Unique Visitors:
        11/2012: 161,959,555 Monthly Unique Visitors
        12/2012: 163,582,176 Monthly Unique Visitors
        01/2013: 164,827,887 Monthly Unique Visitors
        02/2013: 163,723,320 Monthly Unique Visitors
        Decrease of 0.67% (February has only 28 days against 31 in January) against January and an increase of 12.10% year-over-year
        Compare with the development of Linkedins Unique Visitors:
        11/2012: 26,050,157 Monthly Unique Visitors
        12/2012: 26,216,865 Monthly Unique Visitors
        01/2013: 30,495,948 Monthly Unique Visitors
        02/2013: 27,410,040 Monthly Unique Visitors
        Decrease of 10,12% (February has only 28 days against 31 in January) against January and an increase of 7,71% year-over-year
        Compare with the development of Foursquare Unique Visitors:
        11/2012: 2,270,280 Monthly Unique Visitors
        12/2012: 2,419,708 Monthly Unique Visitors
        01/2013: 2,511,232 Monthly Unique Visitors
        02/2013: 2,286,047 Monthly Unique Visitors
        Decrease of 8,97% (February has only 28 days against 31 in January) against January and an increase of 56,23% year-over-year

      • Local Corp development of Unique Visitors:
        11/2012: 18,745,842 Monthly Unique Visitors
        12/2012: 22,738,206 Monthly Unique Visitors
        01/2013: 26,410,927 Monthly Unique Visitors
        02/2013: 24,017,605 Monthly Unique Visitors
        Decrease of 9.06% (February has only 28 days against 31 in January) against January and an increase of 38.64% year-over-year
        Compare with the development of Yelp's Unique Visitors:
        11/2012: 19,358,705 Monthly Unique Visitors
        12/2012: 21,017,483 Monthly Unique Visitors
        01/2013: 22,293,301 Monthly Unique Visitors
        02/2013: 21,063,155 Monthly Unique Visitors
        Decrease of 5.52% (February has only 28 days against 31 in January) against January and an increase of 12.66% year-over-year
        Compare with the development of Google's Unique Visitors:
        11/2012: 170,708,977 Monthly Unique Visitors
        12/2012: 172,771,973 Monthly Unique Visitors
        01/2013: 174,123,575 Monthly Unique Visitors
        02/2013: 173,396,028 Monthly Unique Visitors
        Decrease of 0.42% (February has only 28 days against 31 in January) against January and an increase of 10.73% year-over-year
        Compare with the development of Zillow’s Unique Visitors:
        11/2012: 10,978,144 Monthly Unique Visitors
        12/2012: 11,366,564 Monthly Unique Visitors
        01/2013: 14,298,071 Monthly Unique Visitors
        02/2013: 13,415,496 Monthly Unique Visitors
        Decrease of 6.17% (February has only 28 days against 31 in January) against January and an increase of 45.23% year-over-year
        Compare with the development of ANGI’s Unique Visitors:
        11/2012: 2,603,340 Monthly Unique Visitors
        12/2012: 2,551,023 Monthly Unique Visitors
        01/2013: 3,454,644 Monthly Unique Visitors
        02/2013:3,185,928 Monthly Unique Visitors
        Decrease of 7,78% (February has only 28 days against 31 in January) against January and an increase of 50,10% Y-o-Y
        Compare with the development of Meetme’s Unique Visitors:
        11/2012: 3,279,980 Monthly Unique Visitors
        12/2012: 3,129,931 Monthly Unique Visitors
        01/2013: 2,992,949 Monthly Unique Visitors
        02/2013: 2,453,968 Monthly Unique Visitors

 
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