Yahoo! Inc.: digital media services and business model overview
This paper contained details of Yahoo!Inc's CIM (CONFIDENTIAL INFORMATION MEMORENDUM).The format adopted is as follows: Executive summary – It should be about half a page providing enough information to make the decision by senior management level. • Business and Industry Analysis –?Critically analyze the nature of the industry with reference to strategic valuation multiples.?Analyze and determine industry profitability with reference to attractiveness of the industry using Porter's 5 forces analysis. Determine the company strength and weakness with reference to its competitive strategy based on the theory that a firm's value is a factor of: • the industry in which they operate, • the life-cycle of the industry • and the companies competitive advantage with regards ?to sustainability of their earnings • Technology and Marketing – Depending on the company you pick, you may have to go in detail if the technology is critical in the operations and revenue generation. • Per/Post merger Capital and management structure of the company – You should detail out the capital structure and various strength of the senior management. • Regulatory/Legal/Tax disclosure - You need to do a wider research to foresee any of these obstacles in closing this transaction. • Investment rationale – You should use all your strategic and sales knowledge to make a case for the business. • Accretion-Dilution Analysis - you need to provide Accretion-Dilution analysis with three potential acquirers. • Proposal to potential investor – it should provide some rough idea to the buyer on what percentage of equity you are willing to go for. • Premium Range – Once you have identified the potential acquirer, you need to provide a range of expected premium on the top of the valuation by using ‘Transaction comp' method.
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Confidential and Private
Company overview
Yahoo!, Inc. is a large digital media company that specializes in the delivery of personalized digital content as well as experiences across millions of devices around the globe (Market Watch, 2012). The company provides highly engaging and innovative canvases that are used in advertisement in order to connect with the millions of online target audiences across the globe. The company provides several services to different categories of people and businesses. To the normal users, it provides various services like online properties, news, entertainment and email services while to the advertisers, Yahoo! Inc. provides a wide range of marketing services that are designed in way that ensures that it effectively connect with the subscribers of its Yahoo! Properties products. The website also connects advertisers with other third-party entities through its integrated Yahoo! Advertisement offerings. At the moment, the company through its Yahoo! Properties provides users services that fall into 3 main categories; Media, Search & marketplaces and Communications & Communities. The company's offers are available on different devices like PCs, mobile devices as well as TVs. Its Communications & Communities offerings is made up of other services like Yahoo! Messenger, Yahoo! Mail, Yahoo! Answers and Connected TV, all of which provide the users with a wide array of communication as well as social services across a wide range of devices via broadband internet access. The Marketplace and Search offerings are specially designed to provide users and businesses with a quick source of answers. The company's Media offering is specially designed to effectively engage users with a lot of compelling and yet relevant content as well as services on the internet. The company's media services and property include Yahoo! News, Yahoo! Homepage, Yahoo! Sports, My Yahoo!, Yahoo! Finance, Yahoo! Toolbar, Yahoo! Contributor Network, Yahoo! Entertainment & Lifestyles as well as Yahoo! Pulse. The company also offers its advertisers various top notch targeted solutions which includes search and behavioral targeting, extremely valuable insights into their clientele base as well as a wide range of tools that can effectively leverage the gathered insight for highly optimized performance of the programs. Yahoo! Inc. also provides a variety of software solutions as well as platforms for use by third-party developers, publishers as well as advertisers. These solutions include Yahoo! Open Strategy, Yahoo! Developer Network, Yahoo! Updates, Yahoo! Application Platform, Yahoo! Query Language as well as Yahoo! Search BOSS. Yahoo! Was founded by Jerry Chih-Yuan Yang together with David Filo in the moth of January in 1994.The Company is headquartered in the city of Sunnyvale, California.
Financial Summary
The company's financial health is summarized in the consolidated statement of income, consolidated balance sheet and consolidated statement of cash flow as shown below.
Transaction overview
The Yahoo! Board of Trustee has voted to start a procedure to explore strategic partnership avenues with other companies, to strengthen the organization operating visibility and increase its access to capital. The strategic partnership shall bring on board non-profit making organizations and shall include selling off the capital assets to a profit making organization. However, the Board of Trustee selected a Special Committee to take necessary steps to review and appraise the available strategic partnership opportunities and retain Ark Financer (AF) as the organization financial advisor to help in the process.
Ark Financer believes that there is a lot of existing opportunities for digital firms which can be utilized, to propel an organization in the realization of its full potential which can make its revenue generation accelerate on a double digit per cent. The available opportunities are seen by its financial advisor (Ark Financer), as a potential gateway significant to those companies which are seeking to show presence in service delivery throughout the targeted region.
Yahoo! portal SWOT Analysis
Opportunities
The ICT globalization, expansion and emerging of new markets especially into Africa and Asia is a viable an opportunity for Yahoo! Emerging of new network and internet technologies such as fourth generation (4G) network expected to facilitate an increase in internet video advertisement drastically. Invention of cross channel advertising system provides much potential for the Yahoo to grow and increase its customer base.
The emerging and growing number of new and young internet consumers with sizeable amount of money to spend on online marketing through video creates important opportunities for Yahoo to grow its revenue collection.
Threats
Yahoo faces stiff completion from other search engines such as Google and MS, this can make it loss its customers to them. The company faces political or governmental forces like any other company which offers internet and voice over internet protocol (VoIP) products and services. Yahoo is subjected to regulations or users concern on privacy and protection of users' data which sometimes can be so much expensive to the organization especially when the firm is sued, it can adversely affects Yahoo business. Social media network such as Facebook and MySpace are breaking the tradition and currently offering advertisement services. Google has surpassed Yahoo in revenues and has far more cash flow for potential Acquisitions and spending on technology, therefore it gives Google more market voice than Yahoo.
Exhibit A
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