Yet Another Reason to Avoid Yahoo Stock

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Yahoo (YHOO) stock may have posted a doubler in 2013, but 2014 hasn’t been so kind so far. Since the start of the year, shares have slid almost double-digits now that the excitement over Alibaba, its success and its upcoming IPO has worn off or been baked in.

yahoo stock, yahoo labs

Last week, though, an interesting article on Yahoo’s research division – called, unsurprisingly, Yahoo Labs — was published by Derrick Harris of Giagom. The premise: Yahoo is working to build, or at the very least shape, “the future of content consumption.”

Considering Yahoo stock will need to get its advertising revenue revving again in order to move higher without Alibaba’s help, that sounds promising … right?

Sure, in theory … I guess. Yahoo Labs is working on all the right buzzwords — natural language processing, machine learning, personalization. And the goal, of course, is to better enable the company to “put the right content in front of the right people at the right time.”

A lot of the time, of course, that means serving up content on mobile, which jibes with the company’s recent acquisition of Flurry.  In case you missed it, the whole point of Flurry is to “optimize the mobile experience through better apps and more personalized ads.” As Scott Burke, SVP of advertising technology at Yahoo explained:

“Our combined offerings will enable more effective mobile advertising solutions for brands seeking to reach their audiences and gain unique insights across desktop and mobile. Our users will benefit from app experiences that are more personalized and inspiring.”

But Yahoo Labs is thinking far beyond just phones. Just consider this summary from Harris of Gigaom:

“Phones, watches, public terminals, brain implants — Yahoo wants to be able to deliver content to all of them. That probably means rethinking the inputs (e.g, typing, voice, and probably even video and location data) as well as what the applications actually look like and how users expect stuff to be delivered in any given situation to any given device.”

That sounds pretty freaking cool.

But part of the reason it’s so head-turning is simply because we aren’t used to seeing this kind of cutting-edge, high-level aspirations out of Yahoo — even though big-picture visions are the norm for shoot-for-the-stars tech behemoths Google (GOOG), Apple (AAPL), Facebook (FB) and others.

Yahoo, on the other hand, has been much quieter about ventures like Yahoo Labs … and in turn has been stuck with the stigma of falling behind. Sure, a head-turning female CEO generated some buzz — but a head honcho change is hard to tie to Yahoo stock returns … and many continue to doubt Marisa Mayer’s leadership.

Once again, Alibaba was the driving force for the search giant’s 2013 success — quarter after quarter, it was hard to point to anything other than the Chinese e-commerce company’s strong growth.

Even the company’s acquisitions have become a bit laughable on sheer quantity alone. They’re great for the news cycle, but few have really had Yahoo stock investors cheering. Heck, the founder of Flickr said his company was “murdered and screwed out of relevance” thanks to the Yahoo buy, and it’s still questionable whether blogging site Tumblr was worth its hefty pricetag. Plus, a bunch of fragmented acquisitions seem to reinforce the fact that Yahoo can’t do anything — especially innovate — on its own.

Looking optimistically, Yahoo Labs does at least begin to give the search engine a story — some common thread or goal or umbrella to unite all the random add-ons, and to make the search giant seem even remotely forward-looking.

Still, reading the Yahoo piece, even with hot buzzwords and big plans, one can’t help but think about how Google gets coverage in the same vein on such a regular basis that the news often fails to surprise and sometimes even impress.

Google doesn’t need to let us know about some kind of research arm focusing on the future, because Google as a whole is always thought of as focusing on and building the future.

Yahoo, on the other hand, is fighting an uphill battle … and it’s starting far, far behind.

As of this writing, Robert Martin did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/2014/08/yahoo-stock-labs/.

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