Yahoo! Inc. (YHOO)
Q4 2009 Earnings Call
January 26, 2010 5:00 pm ET
Marta Nicols – Investor Relations
Carol Bartz – Chief Executive Officer
Tim Morse – Chief Financial Officer
Imran Khan - JP Morgan
Sandeep Aggarwal - Collins Stewart
Ben Schachter - Broadpoint Amtech
Mark Mahaney - Citigroup Smith Barney
Jason Helfstein – Oppenheimer & Co.
James Mitchell – Goldman Sachs
Justin Post – Bank of America Merrill Lynch
Doug Anmuth - Barclays Capital
Brian Pitz – UBS
Scott Kessler – Standard & Poors Equity
Youssef Squali - Jefferies & Company
Jeetil Patel – Deutsche Bank
Heath Terry – FBR Capital Markets
Mary Meeker and Scott Devitt – Morgan Stanley
Previous Statements by YHOO
» Yahoo! Q3 2009 Earnings Call Transcript
» Yahoo! Inc. Q2 2009 Earnings Call Transcript
» Yahoo! Inc. Q1 2009 Earnings Call Transcript
Before we begin, I would like to remind you that today’s call will contain forward-looking statements concerning matters such as our expected financial and operational performance, our marketing and product plans, our cost initiatives, planned investments, technology improvements and corporate strategy, as well as our expectations for the economy in general and online advertising in particular. Actual results may differ materially from the results predicted in our statements and reported results should not be considered indicative of future performance.
The potential risks and uncertainties that could cause our business and financial results to differ materially from our forward-looking statements are described in our form 10-Q filed with the SEC on November 6, 2009, as well as in the earnings release included as Exhibit 99.1 to the form 8K we furnished today to the SEC. All information discussed on this call is as of today, January 26, 2010 and Yahoo! does not intend and undertakes no duty to update this information to reflect future events or circumstances.
On today’s call we will also discuss some non-GAAP financial measures as we talk about the company's performance. These may include operating income before depreciation, amortization and stock-based compensation expense, which will be referred to as operating cash flow; revenue excluding traffic acquisition costs, which we will refer to as revenue ex-TAC; non-GAAP net income and non-GAAP net income per share. Reconciliations of these non-GAAP measures to the GAAP measures we consider most comparable can be found on our corporate website, info.yahoo.com, under Investor Relations.
We will have prepared remarks that will last about 30 minutes and then we will have a brief Q&A session with Carol and Tim. Now I would like to turn the call over to Carol.
Thanks Marta and welcome back. Good afternoon and thank all of you for joining us. Today we are going to briefly recap 2009 and the progress we made during a year of significant change at Yahoo!, talk about our financial results in detail, address some of the key topics of interest of Yahoo! and our industry and outline our strategy and some of our plans for 2010.
I recently celebrated my one-year anniversary with the company and what a ride it has been. In fact I might say I made it through my first year with the company and it was a wonderful ride. Very bumpy and frankly like many other business leaders I am very, very glad it is over. But it was also a great opportunity restructure, reset and reposition Yahoo! for the next era of growth.
I view my first year at Yahoo! in three phases. First I took a look at our consumers and the experience we provide them. I realized that we had to invest in the products that users engage with the most like the Homepage, mail, messenger, news, sports, finance and entertainment. We also decided to close down products that didn’t drive engagement or proudly represent Yahoo! In that same vane I even asked employees to sign their names next to projects they have done and if they can’t then they need to go back and make it right so they are proud of what they deliver.
The second phase was listening to advertisers. Working to improve our relationships with them and to continue to deliver quality data, insight and innovative ad platforms. With 600 million users on Yahoo! branded sites we have one of the largest, most valuable and highest quality audiences on the Internet and we are constantly coming up with new ways to connect advertisers with the consumers they seek.
Then came the third phase. I really started to focus on how we generate value. For us it is the vast amount of data we gather and use to deliver a better, more personal experience for users and a better, more targeted audience for our advertisers.
Let’s look at our homepage for example. Since we began paring our content optimization technology with editorial expertise we have seen click through rates in the Today module more than double and we are making additional improvements to the technology that will make the user experience even more personally relevant. While we have extremely sophisticated technology and brilliant scientists powering these efforts, we have been letting great data about the consumers, data that is very attractive to advertisers fall to the floor. We are the leader in targeting and insight but we simply aren’t even close to maximizing the value of our massive audience for advertisers.
Truth be told, no one has uncovered the holy grail of making advertising as relevant as content is 100% of the time. Beyond just offering advertisers a specific bucket, say women aged 35-45 and have children, we instead need to deliver many more specific attributes of scale. For example, women aged 35-45 with kids under three who are shopping for a minivan, and on and on and on and on. If we can do this we can create a better experience for both the user and the advertiser.