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Why Yahoo Inc (NASDAQ:YHOO) May Re-Enter Instant Messaging Space

Yahoo Inc (YHOO) Marisa Mayer

Yahoo! Inc.  posted its second quarter results last week and investors were less than happy. The firm posted earnings of $0.16 per share on revenue of $1.03B below the consensus estimate of earnings of $0.18 per share on revenue of $1.04B. The shares of Yahoo closed down 0.30% to $32.72 in yesterday’s session and the stock was down another 0.05% in after-hours trading.

Yahoo Video

However, investors might want to exercise more patience with Yahoo Inc. as the firm continues to transition and change after years of stagnation. Since taking over in 2012, CEO, Marissa Mayer has been working hard to reposition the firm. One of such moves was the purchase of Tumblr for $1.1B.

Yahoo Messenger Might be Coming Back

About 10 years ago, there were only two IM platforms, Yahoo Messenger and others. Yahoo’s IM service especially had a lead over Microsoft’s Hotmail IM service with its “chatrooms” that allow users to meet new people. Veteran IM users will still remember the most asked ASL (Age, Sex, Location) question. The arrival of Myspace and other social media sites gradually eroded Yahoo’s relevance in the IM space.

Recent news suggests that Yahoo Inc. might be making a comeback into the instant messaging space with its Yahoo  Messenger. Details are still sketchy but Re/Code reports that the firm is ready to announce a new mobile app today or tomorrow at a media event in New York. It is also clear that the app has a mobile focus and all hands points to the possibility that Yahoo will release a cross-platform messaging app.

Instant messaging is already a major point as mobile takes social interaction a new level. Facebook’s $19B acquisition of WhatsApp, the success of SnapChat, iMessage and the recent launch of Facebook Messenger all points to the value in mobile.

Will Yahoo’s IM Find its Mark?

Until Yahoo makes its announcement, words about Yahoo  comeback into the IM space are mere rumors. It would be interesting if Yahoo reenters the IM space. For one, Yahoo will be competing with the likes of Snapchat, Facebook Messenger, and iMessage.

Last week, Yahoo quietly launched a new version of its Yahoo Messenger app under the name Yahoo Livetext – Video Messenger in the Hong Kong iTunes App Store. The new app mixes video feed (without audio) with regular text messages in a chat. A Yahoo spokesperson told TechCrunch that the firm is “experimenting with new product experiences that delight our users. We have nothing further to share at this time”.

Yahoo is already late to the IM party and it would need to present something radically different to make a mark. Yahoo might want to consider multi-language voice-to-text translation as its key to making a difference in the IM space.

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Victor Alagbe is a seasoned business and finance writer with a specialty in writing about how to invest for the long-term in healthcare, pharmacology, energy and tech stocks. His long-term focus is on stocks that provide a nice mix of growth and income. For the short term, he passionately writes about trading stock options for the excitement and leverage that stock options offer.

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