Yahoo! Inc. (YHOO) Looks to Enhance Mail As It Slips Behind Competitors


Yahoo! Inc. (NASDAQ:YHOO) disclosed just ahead of their earnings announcement on October 20, that it was aiming to invest millions of money in upgrading its nearly two-decade-old e-mail service. In the last few years Yahoo has lost a lot of ground in email tom competitors such as Google’s Gmail.

Will It Work In Favor Of the Company?

When email was first launched, Yahoo! Inc. (NASDAQ:YHOO) had the advantage of attracting people and that also ensured a solid visit to its site. In fact, it was one of the reasons for boosting its traffic. However, the current trend moved towards smart devices, be it phones or tablets. Given that fact, how far the company’s plan will work out is a mystery since everyone started discounting the fact that it would not be the future of the company. It appears that the internet firm is looking to enhance its email service with features such as the password less entry. It believes that such features might fuel more traffic to its sites thus leading to increase in ad sales by extension. However, the company seemed to be getting ready to fight a previous war that was already lost.

Currently, Alphabet Inc (NASDAQ:GOOGL) unit Google’s Gmail alone attracts more traffic. That was confirmed by an independent research firm, ComScore, which said that unique visitors to the Gmail have witnessed 13% growth in the United States after September. On the other hand, Yahoo! Inc. (NASDAQ:YHOO)’s email services attracted 10% less traffic in the same period. Providing additional features like password less would be a great feature. However, doubts are expressed by different sections whether it would turn out to be a key factor in enhancing the fortunes of the company. Instead, experts believe that it could focus better on its real requirements, which should be mobile-first ad tactics.

Others Are Way Ahead

In one of the glaring comparison, Bloomberg Intelligence report pointed out that Yahoo! Inc. (NASDAQ:YHOO) could make only 19% of its ad revenue from mobile during the first quarter of the current year. On the other hand, Facebook Inc (NASDAQ:FB) generated 73% of its ad revenue from the mobile segment in the same period. In fact, when the social media came with an IPO in 2012, the biggest drawbacks pointed out by analysts’ were its effectiveness on mobile. But the company’s results over the last few quarters proved skeptics wrong whereas Yahoo is struggling to shut the mouth of its pessimists and skeptics.

International Internet advertising revenue jumped nearly 86% to $156 billion in the current year from $84 billion in 2011. That translates into a compound annual growth rate of nearly 17% in the four-year period. However, Yahoo! Inc. (NASDAQ:YHOO)’s ad revenue slackened 2% to $4.89 billion from $4.9 billion in the same period.

Slow In Mobile

The real action is on the mobile front, where the company is considerably slower than its rivals to generate enough money. According to eMarketer, the company’s share of mobile ad revenue was only 3.3% in the United States last year. Again, Alphabet Inc (NASDAQ:GOOGL)’s Google enjoyed a share of 36.9% whereas Facebook Inc (NASDAQ:FB) managed with 18.5% share. The worst is Yahoo! Inc. (NASDAQ:YHOO) is predicted to witness a further fall through the year 2017 as its total Internet ad market share dropped from 25% ten years ago.

The company’s mobile apps occupying the top ten ranks did not help to generate the kind of ad revenue that the dominant companies enjoy. Currently, investors’ hope rests largely on the spin-off and the resultant impact since they would be getting it tax-free.

Viraj Shah

Viraj Shah has completed M.Com (Finance) and is currently pursuing his CFP. He tracks US markets along with other global markets like India very closely. He is very passionate about stocks, real estate, and technology. He also believes that money can always be made in the market.

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