TechCrunch announced October 25 that Yahoo! (Nasdaq:YHOO) made its first M&A deal under new CEO Marissa Meyer, acquiring iPhone app startup Stamped, for several million dollars. The size of the deal isn't important but rather the message it sends to investors about Yahoo!'s future. Clearly, mobile is a big part of it. Here's why.
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Stamped is almost a year and half old and was founded in New York City by former Google (Nasdaq:GOOG) employees Robby Stein, Bart Stein (not brothers) and Kevin Palms. Prior to founding Stamped, CEO Robby Stein worked as a product manager at Google under the auspices of Marissa Mayer.
In addition to the Steins, several other employees formerly worked at Google and to top it off Google Ventures was one of its investors. Therefore, when Mayer took the top spot at Yahoo! in July, it was inevitable that this talented group of entrepreneurs would eventually join her team.
In Yahoo!'s third quarter conference call, an analyst asked Mayer about hiring plans. Mayer explained that it needs to get half of its technical employees working on mobile applications and while there are some great people already doing so, it needs to hire plenty more if it wants to become successful at mobile.
Mayer also mentioned that since she's laid out the broad strokes of a game plan in late September, the applicant pool has improved dramatically. People want to go to work at Yahoo!. Acquisitions such as Stamped only speed up the recruiting process. Yahoo! isn't looking for billion-dollar acquisitions but rather anywhere from $10 million to $200 million. Smaller acquisitions are easier to integrate.
The important criteria for any deal are mobile application and quality technical talent. In the case of Stamped, it's brought the infrastructure to build out Yahoo!'s NYC-based product development and engineering office. While Stamped's original product is being put to bed, expect something bigger and better in the near future.
SEE: The Wonderful World Of Mergers
Current State of Yahoo!
According to ComScore, 170 million people visit Yahoo!'s different sites each day and none is more important than its home page. Yahoo! is redesigning its home page to improve the user experience, making visiting it a permanent habit. In terms of products, the home page, along with search, mail and mobile will become its main focus.
All of it tied together, however, by quality technology platforms. For instance, its home page isn't optimized for mobile. That will change. Everything it does on the desktop will be built to work equally well on mobile. If Yahoo! wants to be the "site of habit" online, it will have to cater to a mobile audience. The Stamped deal has mobile written all over it.
SEE: Mergers And Acquisitions: Understanding Takeovers
The Bottom Line
To recap, Yahoo! is focusing on using technology to drive its four main areas of business. Its homepage will be redone, becoming the center of everything it does. In search, it will continue to work with Microsoft (Nasdaq:MSFT) until next April, when it must decide whether to renew their cooperative arrangement. Whatever happens, there is an emphasis on mobile search.
Its email and instant messaging platforms will be upgraded for both mobile and the desktop. Lastly, its 76 applications spread between Android and iOS app stores will be brought together under one roof. As Mayer stated in the third quarter conference call: "Our top priority is a focused, coherent mobile strategy." Acquiring Stamped is a big move in that direction.
At the time of writing, Will Ashworth did not own any shares in any company mentioned in this article.
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