Yahoo’s search business has largely been a disappointment lately; the decline in Yahoo’s search ad sales accelerated last quarter and the company’s share of the search market dropped nearly a full percentage point last month, according to comScore (NSDQ: SCOR) figures. But at the Barclays Global Capital Technology Conference this week CFO Tim Morse said the business was on the way up. He said that revenue per search was “making strides” this quarter, in part due to improving economic conditions and the holiday season — but also because of a number of Yahoo-specific initiatives (Asked for specifics, Morse mentioned “tweaks” Yahoo (NSDQ: YHOO) had made to its redesigned home page, which now includes a greater emphasis on search).
“Make no mistake for those that have the misconception that Yahoo is out of the search (market). We are not. We are very focused,” he said. “We’re going to improve RPS, revenue.” Morse re-emphasized that even after the Microsoft (NSDQ: MSFT) deal goes into effect, the company would continue to innovate on the user experience side. That focus was highlighted once again Thursday with Yahoo’s announcement that — like Google (NSDQ: GOOG) and Microsoft — it would integrate recent results from Twitter on its search results pages.
As for the fall in search share, Morse said that half of the most recent decline could be attributed to the end of toolbar distribution deals with big PC makers; something which analysts have said could eventually lead to a three percent decline in Yahoo’s search share. But Morse said that the decline last month was “precipitous” and “didn’t seem to jibe with what we see internally.”
Other highlights from Morse’s remarks:
– Microsoft search deal: Microsoft and Yahoo only announced Friday that they had finalized the search pact that they had agreed to at the end of July. But Morse said that “nothing is different between the definitive agreement and initial short form (of the agreement).” He said the companies had delayed a final agreement to make sure “all the details worked.”
– Operating margins: At the company’s analyst day in October, Yahoo said it hoped to increase its operating margins from its current six percent to at least fifteen. So, how is that going to happen? Well, it might not be too difficult. Morse noted that the $650 million in cost savings Yahoo expects from the Microsoft deal will add about nine percent, on top of the current six. In addition, he said the company would work on improving “internal efficiencies.”
– M&A: A top priority for Yahoo’s growing cash coffers is M&A, Morse said, adding that the company was interested in acquisitions that would bolster its user base in some regions (like its recent purchase of Arab portal Maktoob) and also make the company more appealing to advertisers.