Despite the fact Marissa Mayer’s appointment to the top job at Yahoo! (NASDAQ: YHOO) signals that the company could become more focused on creating new products, for now it must continue to focus on doing what it does best; provide content. The company has released that it will provide comprehensive coverage of the Olympics in an effort to increase traffic on its sites. [1]
Despite the competition that it faces in this endeavor from companies like Google (NASDAQ:GOOG), (which during 2008 added shortcuts to search for easier navigation to Olympic information) this undertaking presents a unique opportunity for Yahoo! to not only attract sports fans but the layman drawn to sports due to the importance of the Olympic Games.
Check out our complete analysis of Yahoo!
According to our model of its core operating segments, Yahoo!’s display advertising business is the most valuable, representing 12.9% of Yahoo!’s total value. Increased traffic on its website due to the Olympics could provide the company with a much needed boost by increasing RPM, as advertisers will be able to provide more targeted advertising to Olympic followers.
If an increase in RPM translates into higher overall revenues and earnings, it might be the catalyst that Yahoo! needs for a convergence of its market price and the Trefis price estimate to occur. If you would like to assess the impact of any increase in RPM on Yahoo!’s value, please check out our tool below:
To stimulate user engagement during the Olympics the company is releasing products such as London Pick’em, which would allow users to predict the outcomes of events during the competition and IntoNow, an iPad app, which provides supplemental information about the Olympics while a user watches the games on TV.
We currently have a $19 price estimate for Yahoo!, which is approximately 20% above its current market price.
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