Wall Street analysts looking for Yahoo to go on the offensive and reposition the company for long-term success had mixed thoughts after the company announced earnings Tuesday. Yahoo CEO Scott Thompson stressed that there will be a new Yahoo under his leadership, but analysts want more proof before jumping off the fence either way.
Yahoo's willingness to aggressively pursue mergers and acquisitions -- and potentially, entirely new businesses -- as well as a focus on speed seemed to encourage Macquarie Analyst Ben Schachter. He believes Thompson could tap his PayPal expertise and look to local- and e-commerce-based transactional models built around Yahoo's massive data structure. He also seems encouraged that Thompson understands that the rapid shift to mobile is impacting the overall Internet landscape.
With Thompson on board, Yahoo appears to have a renewed focus on search engine marketing and services. Today, the company struggles to gain market share from Google. Search query volume dropped from 15.1% in November to 14.5% in December, according to comScore data. Combine the numbers with Bing's search volume, and the December search share rises to 29.6% -- down from 30.1% sequentially.
Minus operating expenses, search revenue fell 3% in the quarter to $344 million, less than the 13% sequential decline. Yahoo and Microsoft continue to work on their search partnership, making several improvements that led to higher revenue per search (RPS) in the mid-to-high single digits both compared with a year ago and sequentially.
"I think the progress we've made across a wide variety of areas for the Search Alliance in the fourth quarter was definitely the best we've seen," said Timothy Morse, Yahoo CFO, during the company's Q4 earnings call.
Microsoft's AdCenter advertising platform demonstrated higher search ad clicks, specifically during Black Friday and Cyber Monday. Yahoo and Microsoft had extended the RPS guarantee. In the agreement, through March 2013, Microsoft makes up the shortfall of expected Yahoo search revenue.
Aside from search on the desktop, Morse said creating new revenue streams through mobile will become critical. Rather than being concerned, he's "kind of optimistic about how mobile and local -- it all converges and the opportunities that Yahoo has with its unique reach of data sets."
Although mobile traffic more than doubled in Q4 2012, as indicated by Morse, some marketers might want to know exactly what that means: more than doubled from when -- or what.