Commentary

Search On Yahoo's Radar, But Will It Become A Cash Engine?

Yahoo took a close look at search and metrics during the company's Q4 2014 earnings call. Company executives fielded questions on everything from Panama to the partnership with Microsoft. CEO Marissa Mayer kept reiterating the importance of search to the company's long-term strategy.

"We're long in search and we do intend to continue to invest in the search user experience and in really making sure that Yahoo users on the network ultimately, really gather tremendous experience," she told analysts and investors.

Search seems to be drawing in more advertising dollars. Gross search revenue rose 14%, although search revenue minus TAC was flat in Q4 2014 at $462 million, compared with the year-ago quarter.

Mobile revenue rose 23% to $254 million in the quarter, compared with the year-ago quarter. Despite the growth, Yahoo must tackle challenges. Much of its mobile revenue comes from search ads, and that market continues to become more competitive as companies like Yelp, Amazon, TripAdvisor and other specialized vertical search apps attract users and fragment the market, per eMarketer. In 2014, Yahoo owned 4.9% of the U.S. mobile search market, but growth has begun to slow.

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When analysts asked about investments in search, Mayer called the media "very capital intensive." She said there has been some amount of reinvestment in search, but ultimately it's really about making better capital control around those expenditures and investments.

Clicks from paid-search ads grew 17% in Q4 2014, compared with the year-ago quarter, but the cost per click fell 3%. Search click revenue grew 13%. The Americas performed well with search revenue ex-TAC up 13%. In Asia-Pacific a search migration in Taiwan and Hong Kong helped to push up results.

Acquisitions, including talent, will "align" with several main areas, per Mayer, including search, communications, digital magazines, and video as well as Flickr and Tumblr.

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