With its highly anticipated Q4 and 2013 annual earnings release slated for this afternoon, most eyes will be on Yahoo!'s (NASDAQ: YHOO) recently completed quarter. Analysts are expecting revenues to be flat relative to 2012's Q4, though Yahoo!'s streamlining efforts should result in a 21% jump in earnings, from $0.32 a share in 2012 to fourth quarter 2013's earnings expectations of $0.39 per share.
There are several key questions to be answered at today's earnings announcement. Yahoo! got a boost when CEO Marissa Mayer said half its 800 million monthly average users (MAUs) were accessing Yahoo! via mobile devices, up 33% in a year. But will that continue? There are also questions surrounding the impact of Yahoo!'s many acquisitions, continued cost-cutting efforts, and ad revenues. But despite the significance of today's earnings call, Yahoo! investors have something more important to consider: 2014.
Time to look forward
An analyst at Cantor Fitzgerald recently said 2014 is the year that Yahoo! needs to kick-start growth or the "honeymoon's over." He got that right, maybe even more than he thought. Why? Because 2014 is the litmus test to determine if Yahoo!'s emphasis on content is taking hold. Mayer's hiring of Katie Couric, adding Saturday Night Live archive clips, and recruiting a couple of New York Times veterans were just a few of Yahoo!'s recent content-related moves.
Taking a piece of the online-ad-revenue pie from Google (GOOGL -1.23%), with its industry-leading $14.9 billion in quarterly revenues, is a long-term challenge and a mammoth one. That's one reason Yahoo!'s shift to content from its reliance on search-related revenues is the right direction. Content is what differentiates Yahoo! from Google, and this is the year to prove it. Why this year? Three reasons.
The stars align
Even if you're not a sports fan, you're probably aware the Super Bowl is this weekend. Easily one of the most watched programs each year, the Super Bowl attracts fans and nonfans alike. In a recent survey, Super Bowl commercials were cited by nearly 25% of the respondents as the reason for tuning in. Apparently, the spots are viewed as "entertainment." But for most, the Super Bowl is about the game, whether or not the Broncos or Seahawks are "your team."
What makes 2014 such a key year for Yahoo!, particularly as it relates to its sports-related content, is the Super Bowl may end up being just the third-most-watched sporting event this year. With the Sochi Olympics set to begin early next month and the World Cup kicking off this summer in Brazil, 2014 is a sports fanatic's dream come true. It's also a chance for Yahoo! to step up and show shareholders content truly is king.
Sports already plays an integral part in Yahoo!'s content plans and it's working. According to October 2013 data from comScore, Yahoo! trailed only ESPN as the most popular online sports destination. With 57.4 million unique visitors for the month of October and the average minutes spent by a user of 69.5 minutes, Yahoo! is clearly the sports-information site of choice for a lot of fans.
Final Foolish thoughts
With the Super Bowl imminent, and Yahoo! and NBC Sports extending their partnership to team up for digital coverage of the Sochi Olympics, Q1 2014 is the time for Yahoo! to shine. Should investors expect a huge jump in revenue overnight because of these two significant sporting events? No, it doesn't work like that, not to mention Yahoo!'s content strategy doesn't rely solely on sports. But the events are big enough to drive enough site traffic that investors should expect to see some impact to Yahoo!'s top line.
But Q1 2014 is just the first test for Yahoo! With what is historically the most-watched sporting event in the world coming this summer, the World Cup gives Yahoo! another chance to prove content can, and will, drive ad revenues. Can Yahoo! break out in 2014 and make a dent in Google's online advertising market stranglehold? We're about to find out.
