Bloomberg News

Yahoo Japan Targets Mobile Services as Economy Spurs Advertising

June 19, 2013

Yahoo Japan Corp. Chief Financial Officer Toshiki Ohya

Yahoo Japan Corp. Chief Financial Officer Toshiki Ohya. Photographer: Akio Kon/Bloomberg

Yahoo Japan Corp. (4689), operator of the country’s most-visited Web portal, expects economic growth and a consumer shift to mobile services to spur revenue gains as it targets advertising growth of at least 10 percent.

“We expect to continue the growth pace a while,” Chief Financial Officer Toshiki Ohya said in an interview in Tokyo. Advertising, which account for more than half the company’s sales, rose 15 percent to 190.5 billion yen ($2 billion) in the year ended March.

Yahoo Japan, 42 percent owned by billionaire Masayoshi Son’s SoftBank Corp. (9984), is targeting a 77 percent increase in earnings within six years by expanding in e-commerce and offering more services for smartphones and tablet computers. Prime Minister Shinzo Abe’s strategy to end deflation, nicknamed Abenomics, may stoke earnings for the web portal as advertisers boost their spending to tap economic growth.

“We expect advertising to lead us in the next two to three years, while it may take a while to double our e-commerce business,” Ohya, 43, said in the June 18 interview. The company needs to add more products and improve e-commerce services to compete against Amazon.com Inc. and Rakuten Inc. (4755), he said.

Yahoo Japan rose 1.3 percent to 48,000 yen in Tokyo trading yesterday, extending this year’s gain to 72 percent. That is more than double the 29 percent rise in the benchmark Topix index. The company is 35 percent owned by Yahoo! Inc. (YHOO:US), the Sunnyvale, California-based operator of the U.S. portal.

Japan’s economy grew an annualized 4.1 percent in the first quarter, the Cabinet Office said in Tokyo June 10.

Mobile Devices

The shift in consumer use of smartphones and tablets will see the use of mobile devices to access Yahoo Japan’s services overtake that of personal computers within two years, Ohya said.

The company almost tripled advertising sales from smartphones to 8.5 billion yen in the three months ended March 31 from 3 billion yen a year earlier, it said.

Yahoo Japan has been adding customers who pay 399 yen a month for services such as access to books and coupons, helped by SoftBank promotions to new customers at its outlets. Yahoo Japan had 9.19 million subscribers, as of March 31, it said.

Net income jumped 14 percent to 115 billion yen in the 12 months ended March, the fastest annual growth in 4 years, it said in April. The company, which has posted 16 straight years of profit growth, forecast net income to rise 9 percent to 56.9 billion yen in the first half of this financial year while sales may jump 15 percent to 180 billion yen.

Increased Acquisitions

Yahoo Japan, which had operating profit of 186 billion yen last year, is targeting earnings of 330 billion yen in the 12 months ending March 2019, it said.

Since Ohya became CFO in April 2012, as part of Yahoo’s first major management revamp since 1996, the company has made at least seven purchases worth more than $663 million, according to data compiled by Bloomberg, compared with none in all of 2011.

The largest deal was the $410 million purchase of a 42 percent stake in Askul Corp. (2678) followed by the acquisition of CyberAgent Inc. (4751)’s foreign-exchange unit for $253 million.

“We have embarked on various projects, so now we want to cast them into shape,” Ohya said.

Ohya led Yahoo Japan to set up a 1 billion yen fund to invest in startups in September, which was then expanded to 3 billion yen in February, the company said. Among its investments are Geniee Inc., a developer of advertising technology, and RareJob Inc., an online English conversation school operator.

“Some companies tap our fund, hoping to find common ground with us in business,” Ohya said. The size of investment in each company is between 50 million yen 100 million yen, he said.

To contact the reporters on this story: Naoko Fujimura in Tokyo at nfujimura@bloomberg.net; Takashi Amano in Tokyo at tamano6@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net


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