Tag Archives: yhoo

Economists Adding Up At Amazon.com, Microsoft, Google

As the tech industry gets ever more data-driven, a “Ph.D. in economics” is more often becoming a job requirement in the sector. Established giants and newer tech firms alike are enlisting economists to help with many crucial tasks. Companies that employ economists include Amazon.com ( AMZN ), Airbnb, IBM ( IBM ), Facebook ( FB ), Microsoft ( MSFT ), eBay ( EBAY ), Yahoo ( YHOO ) and Uber. Hal Varian was a consultant for Google (now part of Alphabet ( GOOGL )) going back to 2002, becoming its chief economist in 2007. And the trend has grown, as tech economists say there’s more demand and appreciation for the work they do. Hal Varian, Google chief economist. Amazon is a leading employer of economists, with “dozens” aboard, says Susan Athey, a professor of the economics of technology at Stanford Graduate School of Business and a longtime consultant to Microsoft. Amazon didn’t respond to a request for comment. Athey says Microsoft is another company with “at least a dozen” economists on staff. She knows of nearly 100 economists employed by tech firms, the big majority joining after 2010. Tech company economists must combine theory with practical application. “We use economic principles and economic theory, but we also use experiments, statistical data and other aspects of the real world to build systems that work and will stand the test of time,” said Preston McAfee, chief economist at Microsoft. These systems can address fundamental business questions, such as setting prices, as well as challenges brought about or exacerbated by the rapid rate of innovation in the tech industry. As firms expand, economists are increasingly working on public policy issues, including privacy issues and intellectual property topics. Economists Must Speak Both Tech And Non-Tech Economists have to analyze large amounts of data. Much of their value to tech firms is in helping to connect the engineering side with the business side. “Economists are trained in the intuition and goals of business, but they are also comfortable with data, statistics and the technical aspects of running a business,” Athey said. “A successful economist is multilingual.” A tech firm today might hire an economist when they struggle to navigate a new marketplace. “You might confront a business problem where you realize there’s no off-the-shelf HBS (Harvard Business School) case study or McKinsey rule of thumb you can apply to manage your unique marketplace,” Athey said. “It’s really an economics research project to figure out the business practices to operate the new platform.” Economists have helped Uber develop its “surge” pricing algorithm — basically, when demand exceeds supply, Uber’s prices rise — and have led Airbnb to offer professional photography services for hosts. While the platforms are new, these problems come down to supply and demand. One of the biggest and most famous contributions of a tech economist is Varian’s work on AdWords. As his first assignment, Varian helped Google develop its auction-based approach to selling ads, still by far the company’s largest source of revenue. Preston McAfee For economists, the fast-paced environment and variety of challenges are among the big draws of working in the tech industry. “I’m in this business because I don’t like routine. I relish having new challenges,” said McAfee. McAfee had been a professor for 28 years before leaving academia to join the tech industry in 2007 as chief economist at Yahoo. At Microsoft, McAfee is working to develop a new business model to sell technology developed by research units directly to customers, among various other tasks. “It’s a new take on a classic research model, and I’m happy to be a part of it,” he said. Google Economist’s One-Year Gig Now In Year 14 Varian had intended to stay at Google for a year while on leave from the University of California, Berkeley, but the excitement of the work at Google drew him away from academia. “We’ve got a great environment here where you have the infrastructure for developing projects and products,” said Varian. “Most of the things we’ve done have been of considerable interest to the company.” Besides AdWords, his other key tasks at Google included helping with its unusual “Dutch auction” style of IPO in 2004, designed to open the process to everyone and not just to favored clients of underwriters. He also collaborates with Google X, the company’s “moonshot” R&D factory, to help develop some of the business models. Michael Bailey, economics research manager at Facebook, looks at academia and tech as a difference between breadth and depth. “In industry, you are working on a larger variety of problems and projects and often need to take more multidisciplinary approaches so you are effectively building more breadth,” Bailey told IBD via email. Bailey, who joined Facebook directly after finishing his Ph.D., said his team is growing and that he expects the tech industry to continue hiring economists at a fast pace. Varian agrees. “A lot of people have developed an appreciation for the kind of economic analysis we do,” he said. The interest is mutual. Within economics, the community of people who study the high-tech economy has grown from a very small number to hundreds across academia, business and government over the last 10 years, Varian says. “We’re developing a new field of practicing economics in the real world,” said Microsoft’s McAfee. “Some of our big successes have been in auctions and pricing, but there are many more of those to come. And I think that’s a very cool thing to be a part of.”

Twitter Failure To Engage Mass Market Sparks Price-Target Cut

Twitter ( TWTR ) got a price-target cut Thursday from investment bank Morgan Stanley, citing falling user engagement and shrinking user growth at the social media site. Unlike its chief rival Facebook ( FB ), Twitter has yet to “break into the mass market,” wrote Morgan Stanley analyst Brian Nowak in an industry note Thursday. Remaining a niche service “makes us wary of Twitter’s addressable audience, and the question marks around the company’s ability to drive future user growth appear unlikely to go away in the near term,” he said. Nowak lowered his price target on Twitter stock to 16 from 18. Twitter stock was down a fraction in afternoon trading in the stock market today , near 17, but that was up 24% from its all-time low of 13.91 brushed on Feb 12. Morgan Stanley also trimmed its projections for Twitter’s user growth. Twitter will end this year with 307.1 million global users, the investment bank now says, down from its original projection of 310.6 million. The amount of time each user spends on the site is also declining, Nowak said, with those lower engagement levels “holding back revenue growth.” In Q4, Twitter’s U.S. mobile users averaged just 2.7 minutes daily on the site, said Nowak, compared to 40.5 mobile minutes for music streaming service Pandora Media ( P ), 30.3 minutes for Facebook and 8 minutes for YouTube, owned by Alphabet ( GOOGL ) subsidiary Google. That’s based on research from ComScore and Morgan Stanley. This year’s new users are expected to come mainly in the second half of the year, with major news events including the U.S. presidential election, the Rio Summer Olympics and the company’s recently announced deal  with the NFL. Twitter reportedly beat out Facebook, Alphabet,  Amazon.com ( AMZN ),  Verizon Communications ( VZ ) and Yahoo ( YHOO ) to capture digital rights to the NFL’s Thursday Night Football. It’s a high-profile foray into live programming for Twitter and for the NFL, which in the past has only streamed selected games. “An inability for these events to deliver would likely mean even more downside to our monthly active user estimates,” Nowak wrote.

Yahoo Has Been In ‘Free Fall,’ Says Report; Bid Deadline Looms?

With initial bids reportedly due Monday, Yahoo ’s ( YHOO ) revenue and earnings are expected to decline this year, according to a report by tech news site Re/code on Wednesday. Re/code said it based its report on financial information being distributed by Yahoo’s bankers to help possible buyers figure out how much they might bid. Yahoo has reportedly gotten interest from as many as 40 groups who have until Monday to submit preliminary bids for Yahoo’s core business and Asian operations. The book of disclosure documents “shows a company in what has been a serious free fall,” said Re/code, citing sources interviewed. That “has many nervous about bidding.” A Yahoo spokesperson told IBD via email that the company had no comment about the report. Re/code said that, according to the documents, Yahoo estimates that 2016 revenue “is dropping close to 15% and earnings by over 20%. Those revenues, backing out traffic acquisition costs (TAC), are expected to decline from $4.4 billion in 2014 and $4.1 billion in 2015 — already down from previous years — to $3.5 billion in 2016; meanwhile, earnings before depreciation, taxes and amortization are moving from $1.4 billion in 2014 and just below $1 billion in 2015 to $750 million in 2016.” TAC refers to payments that Yahoo makes to other websites to carry its ads. Yahoo expects to have about 9,000 employees at the end of 2016 — down from 12,500 in 2014 and 10,500 in 2015 — while stock-based compensation remains “steady,” Re/code said. That could indicate that “CEO Marissa Mayer is loading up valued employees with outsize share grants to get them to stay,” the report said.   Yahoo confirmed last week that Senior Vice President of Talent Acquisition and Development Sandy Gould will become the latest high-profile executive to leave the struggling Internet firm. Yahoo has recently implemented layoffs and begun the process of selling itself and spinning off its hefty stake in China e-commerce giant Alibaba Group ( BABA ), and is also in the midst of a proxy fight seeking to oust its entire board. Yahoo’s revenue growth has stalled for nearly a decade as ad dollars continue to slip away to rivals including Facebook ( FB ), Netflix ( NFLX ), Alphabet ( GOOGL )-subsidiary Google, and others that include high-profile startups Snapchat and Pinterest. Expressions of interest are pouring in from dozens of groups that are eyeing buying the struggling Web portal, with Verizon ( VZ ) rumored to be the most likely acquirer, said Monness Crespi Hardt analyst James Cakmak in an industry research report early last month. Yahoo stock lifted 0.7% in the stock market today , closing at 36.66. Sale or not, Yahoo is facing rough waters. In a letter charging the current board of Yahoo with failing to deliver results for its shareholders, activist investor Starboard Value announced that it wants to sweep out all of the ailing Web company’s nine directors and replace them with its own slate during Yahoo’s 2016 shareholder meeting later this year. The letter — from Starboard Value managing member Jeffrey Smith, one of Starboard’s slate of Yahoo board nominees — indicates that Starboard also doesn’t trust Yahoo’s current directors to perform in terms of either the strategic review of Yahoo’s core search and display-ad business or with the eventual fate of Yahoo’s 15% stake in Alibaba and Yahoo’s holdings in Yahoo Japan. Yahoo’s Asian assets — comprised of its Alibaba holdings and a 35.5% stake in Yahoo Japan — represent the vast majority of Yahoo’s $34.69 billion market value. Yahoo owns a 15% stake in Alibaba, or about 384 million shares. Last month, Monness Crespi estimated the value of Yahoo’s core assets at $3 billion to $4 billion. Alibaba stock closed up 1.8% Wednesday at 78.68. Verizon stock was about flat, closing at 53.52.