Yahoo Company Analysis

Internal Assessment

Internal factor Evaluation (IFE) Matrix

Key Internal Factors Weight Rating Weighted Score
Strengths      
Yahoo generates additional revenue through its range of premium services and is not dependent on advertising fees alone. 0.09 3 0.27
Yahoo has a number of revenue generating segments in internet based services including Search, Display Related and Email 0.08 4 0.32
The company is the second leading global internet brand 0.1 4 0.4
The company continues to experience increased revenue over the years, albeit small 0.07 2 0.14
The company has a quick ratio of 2.78 that is above the average in the industry 0.1 4 0.4
Yahoo also offers internet access through third party entities besides offering online properties and advertising 0.07 4 0.28
Anticipated increase in profitability due to layoffs 0.06 4 0.24
Weaknesses      
The company continues to increase its capital lease and other long term liabilities 0.08 2 0.16
Continued net income decreases over time 0.08 2 0.16
Attempted acquisition of the company by Microsoft 0.09 2 0.18
The company has closed several of its video properties and intends to close even more 0.08 2 0.16
Overall decreases in advertising revenue since 2009 0.1 2 0.2
Total 1.00   2.91

 

 

Financial Ratio Analysis

Price Ratios Yahoo Industry S&P 500
Net income (YTD vs YTD) -55.30 13.20 -8.10
Sales (5-Year Annual Avg.) 34.71 69.97 12.97
Dividends (5-year Annual Avg.) NA NA 11.88
Sales (Qtr vs year ago qtr) -11.80 7.60 -5.20
Net Income (Qtr vs year ago qtr) 242.70 46.30 24.70
Net Income (5-Year Annual Avg.) 12.27 87.09 12.30

 

Financial Condition Yahoo Industry S&P 500
Current Ratio 3.4 9.7 1.5
Debt/Equity Ratio 0.01 0.01 1.11
Quick Ratio 3.4 9.7 1.2
Leverage Ratio 1.2 1.1 3.5
Book Value/Share 8.69 85.16 21.58
Interest Coverage NA 0.0 27.2

 

Profit margins % Yahoo Industry S&P 500
Gross Margin 56.3 62.2 38.2
Pre-Max Margin 3.0 27.1 9.9
Net Profit Margin -1.4 20.6 6.9
5Yr Gross Margin (5-Year Avg.) 59.3 60.7 38.1
5Yr PreTax Margin (5-Year Avg.) 19.6 30.4 16.5
5Yr Net profit Margin (5-Year Avg.) 11.9 22.9 11.5

 

Current Strategy

The complexity of its products and services notwithstanding, Yahoo operates under a relatively simple corporate structure that contains only two main business lines. In the process of generating revenue, the company banks on the provision of marketing services to the business sector through its services and products. In essence therefore, Yahoo achieves revenue by strategically advertising the businesses whenever users of the site click on certain tabs or when they enter certain key words. The company’s products are thus essentially useful in revenue generation through the lines of internet marketing and advertisements. The company relies on its huge online presence in marketing its products to the multinational business companies. Additionally, the high number of users that the company h

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