Introduction to Finance
Yahoo! Incorporation is working in the technological sector since 1995. Its main industry is the Internet Information Providers. Yahoo has a wide business lines: it provides internet services to users, advertisers, publishers, and developers worldwide. Today Yahoo! Is operating in a highly competitive market; however there are in the top internet information providers. It market cap is 19. 64 billions dollars that that make them number 2 in this industry.
They major competitors are: – Google with a market cap of 109.91Billion -Baidu with a market cap of 6. 30 Billion -Priceline with a market cap of 3. 36 Billion -Akami with a market cap of 3. 37 Billion It is very Hard to compare them with their main competitors because companies have a huge different market cap (Google: 109. 91 B, Yahoo! : 19. 64B, Baidu: 6. 30 B). Today Yahoo! Employs 13,600 people. In 2008 Yahoo total revenue was 7. 208 Billion with a net income of 424. 30 millions. 2/ Beta-Industry The Beta of the industry is 0. 97.
It is actually lower than the market (beta sector: 1. 02). It could be explained by the importance of the internet information providers. Without this industry, internet would be disorganised.
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This industry has a very important link with the economic fact. Because when we are in recession as today, company invest less and spend less in their internet needed (advertising, new software …) 3/ Beta-Company The beta-company is lower than the beta industry (0. 82 < 0. 93). Yahoo is one of the leader in this industry. they are more diversified than the industry in term of services and geographic operations. Normally more diversified the company, the more their beta will move towards 1.
In this case, it is the contrary because yahoo has been the precursor in this industry, so they have a huge advance and lot more patents than their main competitors. They sell more necessity service than their competitors. It is actually the main reasons why does their Beta is lower than its industry. 4/ 5 year Company Chart vs S&P As we see, the company did much better than the market until April 2006, Yahoo even reached a growth close to 60% at the beginning of 2006 (compare to 2004). This 2006 growth is not surprising: In 2005 yahoo made excellent performance.
This 2006 increase as the announced of those performances (huge revenue, high profit and important EPS). They also announced that much of their dept were paid off. However this increased had not been long due to the comprehensive speculation. Since July 2006 we can see a decrease in the stock value due to the influence of their competitors that they have taken in the industry(Google). I thought that the company bet was very different than today, maybe more than 3(when we see the growth between 2004 and 2006). However it has changed a lot since 2006.