Yahoo Restructures To Focus On Online Media, Social And E-Commerce

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Yahoo‘s (NASDAQ:YHOO) CEO has outlined some major details about Yahoo’s restructuring plans following major layoffs last week, which saw the company shedding almost 15% of its total workforce in a bid to save around $375 million and focus on its core competencies to become more profitable (see our note Yahoo Worth $18, Gets Nimble To Focus On Core Businesses) and compete with the likes of Google (NASDAQ:GOOG) and Facebook.

Check out our complete analysis of Yahoo

Yahoo to focus on online media, social and e-commerce going forward

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The new Yahoo will be organized in three groups – Consumer, Regions and Technology. [1]

The purpose of the Consumer group is to create and improve engaging user experiences on Yahoo’s online properties while the Regions group will focus on advertisers and be responsible for revenue generation. The Technology group will power the Consumer and Regions groups, enabling them to provide best products and experiences backed by their infrastructure and platforms.

Within the Consumer Group, Yahoo is focusing on three main businesses – Media, Connections and Commerce – which are expected to be the main revenue engines, going forward. The Media business includes Yahoo’s online media properties, while Connections include its social offerings like Mail, Messenger, Flickr, etc. Yahoo generates revenues primarily through advertising for both these businesses. The third business – Commerce – is something Yahoo plans to increasingly focus on, going forward. It will primarily be Yahoo’s e-commerce offering in segments such as auto, shopping, travel, jobs, and real estate, for which it plans to leverage its other online services.

We currently have a $18 Trefis price estimate for Yahoo, which stands nearly 20% above its market price. Display and search advertising currently generate most of its revenue, but that could change, going forward, if Yahoo is able to successfully enter the e-commerce space and become a major player.

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