Yahoo! Targets Growth Through Acquisitions

NEW YORK (TheStreet) -- While beefing up its online offerings Yahoo! (YHOO) has shown tenacious determination to grow its advertising revenue.

Its legions of regular visitors have helped drive traffic to Yahoo!'s myriad display ads. Yahoo! remains a formidable force on the Web, accounting for about 10% of all display advertising impressions. That looks like peanuts compared to Facebook's ( FB) nearly 32% share of all display ads placements.

Since CEO Marissa Mayer took control of the direction of the company a vast array of products and services now fills an entire page on the company's Web site.

Yahoo! has also awakened to the need to be a gigantic presence in the world of smartphone users and has completed a flurry of deals to make it a dominating mobile competitor. Recently it announced the acquisition of a company called Bignoggins Productions (don't you just love a clever name like that?).

It's a San Jose, Calif.-based company that develops mobile apps for players in fantasy sports leagues. It is the maker of popular apps such as "Fantasy Monster" and "Draft Monster." It was founded in 2010 by software engineer and developer Jerry Shen.

Part of the deal is that Shen, age 30, will be joining Yahoo!'s mobile engineering team at the company's Sunnyvale, Calif., headquarters. He is the only Bignoggins employee joining Yahoo!.

Yahoo isn't going to keep distributing Bignoggins apps, but will blend some of the underlying technology into its own services for playing in fantasy sports leagues. In case you didn't know, YHOO has been wildly successful in its Fantasy Sports offerings including Fantasy Football and Major League Baseball.

On June 29, YHOO announced it completed its acquisition of Tumblr one of the fastest-growing media networks in the world.

Its tremendous popularity and engagement among creators, curators and audiences of all ages brings a significant new community of users to the Yahoo! network. The combination of Tumblr and Yahoo! is expected to grow Yahoo!'s audience to more than one billion monthly visitors.

Some of YHOO's other recent acquisitions include Astrid, a task-management app maker; Summly, a news-condenser app maker; Stamped, a mobile-review app maker; Propeld, a location-based apps maker; Jybe, a social recommendation site; Loki Studios, a mobile gaming start-up, and PlayerScale, a gaming infrastructure company.

The list of acquisitions seems to go on and on. It has helped YHOO to increase its menu of mobile offerings to the point where the company has increased its mobile email usage by 70%. YHOO has also experienced a 50% increase in photo uploads from another service it bought, Flickr.

Flickr has certainly become one of the most popular online photo management and sharing applications in the world. It appeals to millions who want to share their favorite photos and videos to the world, securely and manageably.

Driving traffic and users to its mobile properties appears to be the consistent approach YHOO is using to create a whole new generation of fans. Its search engine business continues to show signs of improvement and its financial sight is bookmarked by millions around the globe.

We'll learn whether these acquisitions and the attempts to strengthen its mobile offerings and recreate its pages have paid off when the company hosts a conference call on Tuesday, July 16 to discuss its financial results for the second quarter that ended June 30

Let's catch a glimpse at a one-year chart to help us see a picture of how the stock has performed in light of YHOO's quarterly revenue per share. I've also included the trailing 12-month diluted earnings per share (EPS) line. Revenue obviously needs to reverse direction soon.

YHOO Chart YHOO data by YCharts

By the way, as of June 16, CEO Mayer owns over 2.58 million shares, which at YHOO's current share price of around $25 equals $64.5 million of personal commitment in the company she leads.

The top institutional shareholder is Third Point, LLC. As of March 31, it owned 62 million shares or 5.73% of YHOO's outstanding shares. That equates to about $1.46 billion of equity, and by anyone's standards that's a strong indicator that an institution believes in the direction of a company.

The shares of YHOO have had an excellent run and may be due for a pullback. The consensus one-year price target set by the analysts that follow YHOO is $27.52. That's very close to the 52-week high of $27.68.

The company has beaten analysts' EPS estimates for 4 quarters in a row. In the first quarter of 2013 YHOO beat by 58.33%, and it wouldn't surprise me to see them surprise to the upside on July 16. I admit that I like this company's prospects, and I like how YHOO describes itself as a company:

"Yahoo! is focused on making the world's daily habits inspiring and entertaining. By creating highly personalized experiences for our users, we keep people connected to what matters most to them, across devices and around the world. In turn, we create value for advertisers by connecting them with the audiences that build their businesses."

Yahoo! is investing its money in living up to this description one smart acquisition after another. The results will speak louder than words and they're already unfolding.

At the time of publication the author was long FB.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

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