Yahoo Acquires Rondee

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Internet giant Yahoo! Inc. (YHOO) recently announced the acquisition of enterprise conference call service provider, Rondee. Financial details of the deal were not disclosed.

Palo Alto, Calif.-based Rondee was founded in 2006. After the acquisition, Rondee’s staff will join Yahoo’s Small Business unit. The service will shut down and transfer its users to InstantConference, another service provider by the end of July. Existing users can still sign in and create new conference calls until Jul 12, 2013.  

After CEO Merissa Meyer took over the reins of the company, it has been quite active on the acquisition front. Some of its recent acquisitions include Astrid, a task-management app maker;Summly, a news-condenser app maker; Stamped, a mobile-review app maker; OnTheAir, which specializes in broadcasting video chats or interviews to online audiences; Snip.it, which is a kind of clipping service for the web; Propeld, a location-based apps maker; Jybe, a social recommendation site, Loki Studios, a mobile gaming start-up, PlayerScale, a gaming infrastructure company and photo app maker GhostBird Software.  

We believe that these acquisitions are a part of its strategy to boost its offerings in mobile devices, video and personalized digital content as it has lost its leadership position in display advertising to Facebook (FB) and Google (GOOG). With search advertising revenues also declining not only because of Google but also Microsoft (MSFT), Yahoo needs to focus on other major growth markets and emerging geographies. Currently, Yahoo has a huge task at hand, which is to bring back its users and make them spend more time on its properties. If successful, Yahoo may reclaim some of its lost market share going forward. This would be crucial in bringing back advertisers as well. 

In the first quarter of fiscal 2013, Yahoo generated revenues of $1.14 billion, which were down 15.3% sequentially and 6.6% year over year. Traffic acquisition cost (TAC) was down 42.3% sequentially and 49.9% year over year. Excluding these costs in all periods, net revenue was down 12.5% on a sequential basis and 0.8% from last year, short of the consensus estimate.

Yahoo has a Zacks Rank #2 (Buy).

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