Viking Global and Yahoo
Viking Global Investors’ new positions in the fourth quarter include Walgreen Co. (WAG), Canadian Pacific Railway (CP), and Cemex SAB de CV (CX). The firm increased its positions in Facebook (FB) and Valero Energy Corp. (VLO). It also liquidated its positions in Yahoo (YHOO) and Comcast Corp (CMCSA).
Viking eliminated a 1.66% position in Yahoo (YHOO) last quarter. The stake was initiated in 3Q 2013.
Shares fell on the back of lower earnings and revenue in its recent 4Q results, even though Mayer reiterated that the company’s business will not turn around overnight. Full-year revenue ex-TAC was down 1% in 2013, to $4.4 billion from $4.5 billion in 2012, and GAAP net earnings were down 62%, to $1.26 per share, compared to $3.28 in 2012. Yahoo’s core advertising business continues to struggle, as display ad revenues declined by 6% year on year in 4Q 2013, to $553 million. Search revenue is also on the decline with GAAP Search revenue down 4% to $464 million for 4Q 2013. Yahoo is losing market share to Google (GOOG) and Microsoft’s (MSFT) Bing in the search engine space. A recent WSJ report said Yahoo revealed a partnership with Yelp (YELP) to incorporate Yelp’s listings and reviews of local businesses into results on Yahoo’s search engine.
Yahoo hopes its recently launched unified advertising approach will bolster its ad revenues in the coming quarters. The new advertising approach aims at cutting complexity and giving advertisers more return on their ad spending. Mayer said on the company’s 4Q earnings call that Yahoo expects to capitalize on the platform shift to mobile and core product areas remain search, communications, digital magazines, and video.
Yahoo’s biggest acquisition of blogging service Tumblr is yet to generate robust revenue, and it’s slowly ramping up its advertising efforts by launching Sponsored Trending Blog ads in December last year.
Despite the lackluster results, future growth catalysts for Yahoo include its stakes in Alibaba and Yahoo Japan, revenue from advertising especially mobile and video, and monetization of Tumblr.