Yahoo's New Home Page

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Internet giant Yahoo! Inc. (YHOO) announced the redesigning of its website’s home page. Although Yahoo unveiled the new look in the U.S., the rest of the world have to wait for a few more days to view the new home page.

Yahoo, under its new CEO Marissa Mayer took the decision of redesigning its home page after 4 years. Yahoo’s decision comes in the wake of its loss of leadership in display advertising to Facebook (FB) and Google (GOOG). The design change is intended to make the page more attractive to its users so that they spend more time on the page.

As per a report by comScore, Yahoo has been seeing declining engagement on all of its three major revenue earning portals: Yahoo Mail, search and the homepage. In November and December 2012, search revenues were down 28% and 24%, respectively while mail revenues dropped a respective 16% and 12%. Monthly unique visitors to the home page declined 17% in November but rose 4% in December 2012.

As per a report by comScore, Google sites in the U.S. alone have 67% market share followed by Microsoft, which has 16.5%. As of Jan 2013, Yahoo had 12.1% market share. Thus, Yahoo has a long way to go to reclaim its lost market share.

Yahoo Mail is also likely to be challenged by the world’s largest software maker, Microsoft (MSFT), which has started Outlook.com, a free email service. Microsoft will be moving existing Hotmail users to outlook.com along with their hotmail.com email addresses and passwords.

Yahoo, under its new CEO Marissa Mayer is also beefing up its mobile business. The company has undertaken a new marketing strategy according to which it is acquiring struggling start-up companies. It has concluded four such acquisitions.

Yahoo's recent purchases include Stamped, a mobile review app maker; OnTheAir, specializing in broadcasting video chats or interviews to online audiences; Snip.it, which is a kind of clipping service for the web and Propeld, which is a location-based apps maker.

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 to bring back advertisers as well. 

In the third quarter of fiscal 2012, Yahoo generated revenues of $1.20 billion, which were down 1.3% sequentially and 1.2% year over year. Traffic acquisition cost (TAC) was down 17.7% sequentially and 22.2% from last year. Excluding these costs in all periods, net revenues were essentially flat on a sequential basis and up 1.6% from last year, in line with the consensus estimate.

Yahoo has a Zacks Rank #3 (Hold).

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