Yahoo! Earnings Call Transcript

For those who would like to read it, here it is.

Here are CEO Terry Semel’s remarks about the newspaper consortium and local:

Third, we are also executing on extending our ad network and added important new advertising partners. Our partnership with eBay is progressing well. We have officially begun filling both graphical advertising and sponsored search within eBay. Our initiative with a consortium of U.S. newspapers adds significant local advertising growth opportunities and has already grown since our original announcement from over 150 newspapers to some 225 at this point. We have begun initial implementation between local newspapers and Yahoo!’s Hot Jobs, providing an enormous database of additional job listing and giving local newspapers a dramatically larger audience.

Here are Sue Decker’s summary remarks:

To sum up, as we reflect on ’06 and what lies ahead in 2007, we are cautiously optimistic. We are proud of what we’ve accomplished so far with our new search system introduction and that we have extended our lead in online display. We believe this market position, combined with the opportunity to build increasing functionality and features into this new advertising system, plus our window into the passions of the world’s largest online audience puts us in an almost unique position to create future value.

I was struck by her tempered phrase “cautiously optimistic” yesterday while I listened to the call. I was also struck by the contrast in tone between Semel’s more “sweeping” bullishness and her somewhat more conservative-sounding language.

Also of interest, a response to a question on mobile and the company’s investment in RightMedia:

Brian Pitz – Banc of America

Thank you. A quick question on mobile. When do you expect to see a material impact from your mobile opportunities that you’ve talked about? Should we expect to see international first followed by the U.S.?

A second question on Right Media, can you give us a sense for the proportion of your total inventory that you either currently are or will place on the Right Media Exchange? Is this inventory that really went unmonetized previously?

Terry Semel

On mobile, look at it, if you will, as we have been for the last year or almost year-and-a-half, I’d say. First, we’re building a big audience. So to a large degree, you’ve seen Yahoo! products now on more and more and more handsets throughout the world, in some cases tied to either Yahoo! Go 2.0 or in other cases, the new Yahoo! Search which is becoming very popular. We very much thank iPhone, we think it will be a great advertisement for us in many areas. You have seen Yahoo! Mail on many different phones and more and more coming.

So we’re really looking at this year with two views, if you will. One view is we’re starting to build a very large audience on a global basis as more and more handsets and more and more companies start taking the Yahoo! product on — and they are. On the other hand, we’re starting to learn much more about advertising on mobile. That is precisely why we made the deal in with Vodafone in the U.K. The U.K., of course, being the largest market in Europe with us doing more learning here in the U.S. with companies like Opera and others who are starting to work very closely with.

So we see this as a year of continuing to build a big audience, take early leadership in that and throughout this year you’ll find us doing a lot of work on advertising pieces and working with other clients to come up with what would be the best answer and the best way to go forward.

Sue Decker

So I will take your question on Right Media. We are very excited about this investment and about the window into that marketplace. We did start allocating some non-premium inventory to Right Media in Q4, but it’s fair to say we’re largely testing. It’s relatively immaterial as yet.

Our plan is to increase our participation in Right Media in 2007 from where we were in 2006. We really see the opportunities in Right Media as severalfold. One is to be able to sell inventory that if the pricing and yields look stronger in Right Media than what we can get we’ll sell inventory on the margin there. As well, we think a very strategic opportunity is for us to buy incremental inventory and package it with the inventory we have for our major advertisers. So we see a number of different strategic opportunities, but at this point it’s more in a testing mode than full-fledged usage.

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