by Tom Taulli | July 3, 2013 12:25 pm
Yahoo (YHOO) CEO Marissa Mayer loves mobile and thinks it will help get her company into the fast lane again. In order to get in that fast lane, though, acquisitions are critical — precisely the reason she has been on a whirlwind of dealmaking.
The latest grab: a $50 million purchase of mobile video app Qwiki.
The company’s app for Apple’s (AAPL) iPhone allows users to make short video stories. Essentially, this is done by using photos and videos from the camera roll. This is a hot category considering the success of Snapchat and Twitter’s Vine. Heck, Facebook (FB) recently added short videos to its Instagram service.
But Qwiki has not been a huge success so far. It is currently ranked No. 70 on the app store.
The hope, though, is that Yahoo’s distribution footprint should be able to give the app a boost. Plus, there are other perks to the purchase, including the acquisition of Qwiki’s talented engineering team. Such people are hard to snag.
Talented people have come along with other deals Yahoo has made so far. Other recent buys have included the $1.1 billion acquisition of Tumblr as well as smaller purchases for news app Summly, video conferencing platform Rondee and photo-editing app GhostBird.
And yes — all are plays on mobile.
That’s likely part of the reason Wall Street has liked Mayer’s moves so far. YHOO shares are up over 28% year-to-date, and the base of mobile users has gone from 200 million to 300 million during that same time period.
Still, the real challenge will be to integrate the deals and find ways to monetize them — which will not be an easy feat. Even companies like Facebook and Zynga (ZNGA) have had a tough time cranking out revenues from mobile apps.
With that in mind, it’s probably best for investors to be cautious on the stock for now. While acquisitions and a move to mobile are nice, it looks like the company’s growth prospects have already been factored in.
Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.
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