Yahoo! – Eye off the ball

Yahoo needs to stop shopping and get integrating.

• Yahoo! is in line to make yet another acquisition but I am starting to wonder whether or not it has already shopped enough.
• The latest target is imgur, a photo sharing site that has 100m users and a small amount of revenue.
• Imgur is like Instagram in that it is a socialised way of editing and sharing pictures using a computer, tablet or smartphone.
• This is not going to come cheap as the company is not in need of money, has a large number of users and even some revenues.
• This would lead to me estimate that Yahoo! will have to pay somewhere around $300m for this business.
• This is all well and good but why (other than the users) would Yahoo! want this website when it has Flickr?
• Flickr has recently been revamped to offer a much better cloud photography experience and could easily be extended to offer the kind of experience that imgur offers.
• The answer has to be the user base but this is only going to get Yahoo! so far.
• Yahoo! has spent quite a lot of shareholder funds on acquiring a large number of start-ups but very little progress seems to have been made in developing these acquisitions.
• Yahoo! now has one of the most extensive Digital Life offerings available but it remains very fragmented.
• Single sign on, mobile, a consistent user experience and integration of user data remain a distant dream.
• This is what is holding Yahoo! back rather than a shortage of assets.
• This why I believe that the time has come to stop shopping and to get integrating and developing.
• When the user experience becomes more consistent, more mobile friendly and more identifiable as a Yahoo! experience, then the value will really begin to be realised.
• Unfortunately, at the moment Yahoo! seems bent and buying everything that it could possibly want and is only worrying about what to do with those assets at a later date.
• I like Yahoo! as no-one is giving it any credit for a turnaround of its core businesses where I see real potential.
• Instead the stock simply trades on the valuation of its stake in Alibaba.
• This creates the potential for much more upside if Yahoo! can just stop buying companies and get on with developing the assets it already has.
• Yahoo! remains one of my favoured ways to look at investing in the mobile ecosystem.