Yahoo! Inc. (YHOO) Needs To Diversify Than Merely Concentrate On Ads


As Yahoo! Inc. (NASDAQ:YHOO) struggles hard to be transformative, its CEO Marissa Mayer has decided to keep as an extended fix to its core business problems. Yahoo delivered its second quarter reports this week, which were less indicative of any substantial change, Mayer said that they intend to keep a larger chunk of share in the e-commerce company, Alibaba, which is set to enter the New York Stock Exchange this fall. Following this decision, Fox Business asked the opinion of Schaeffer’s Investment Research senior equity analyst, Joe Bell, and Lido Isle Advisors Managing Partner, Jason Rotman, on Yahoo’s future outlook and whether it is comparable to Google Inc (NASDAQ:GOOGL).

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Bell said that investors have been long waiting for Yahoo! Inc. (NASDAQ:YHOO)’s move over Alibaba and that’s why its stocks have been on the sideways for the last few months.

“One interesting thing ahead of earnings, we have actually seen four times as many bullish bets from options traders, so there were a lot of relatively high expectations going into this report,” Bell said.

All in all, Bell considers the Alibaba’s share retention by Yahoo a sort of good news for the investors and should support the company going forward.

However, the spike in the shares of Yahoo! Inc. (NASDAQ:YHOO) was not as much, when compared to its big decision to return half of the total stake proceeds that is 23% back to its shareholders. Responding to which, Rotman said that Yahoo! Inc. (NASDAQ:YHOO) is largely concentrated on ads and content while Google Inc (NASDAQ:GOOGL) is truly a genius and revolutionary based on highly diversified business model. Those factors prompted Rotman to stick to Google Inc (NASDAQ:GOOGL) as his favorite pick rather than Yahoo as he said, “If I had to pick one I would clearly choose Google Inc (NASDAQ:GOOGL) for the long haul, I am not saying Yahoo is going out of the business. But, I think Yahoo needs to be a lit bit more diversified and forward thinking than just content and ads.”

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