Yahoo Connected TV Sales Hit 6 Million Units

Sales of Yahoo Connected TVs appear to have hit the mid-point of the 5-7 million units that were forecast for year-end 2010 (CED Sept 20 p1). Through Jan. 25, 6 million Yahoo Connected TVs had been sold since the platform debuted in 2009, CEO Carol Bartz said on a conference call.

More than 100 Yahoo Connected-equipped TV models have shipped from LG Electronics, Samsung, Sony, Toshiba and Vizio, Bartz said, up from 70 last fall and 37 in 2009. Vizio this year is adopting a dual-technology strategy with its Via Apps platform for Internet-capable TVs. Vizio will maintain its Yahoo Widgets-based platform, and also will field 47- and 55-inch models based on the Google TV platform (CED Jan 10 p2). Sony also is fielding Google TV-based products and Samsung has developed its own Smart TV platform.

Meanwhile, Yahoo’s launch of six new original, branded entertainment video programs in Q4 attracted 21 million unique users a month, who spent an average of 60 minutes on the site, Bartz said. For all video, Yahoo averaged 640 million streams in the quarter, up 43 percent from a year earlier, Bartz said.

Yahoo’s search volume will be “flat to up” this year as it shifts to a Microsoft platform, Bartz said. It forged an alliance with Microsoft in 2009 and completed the transition of its U.S. paid search business to the new platform in Q4, Bartz said. The European search business will move to the platform by mid-year with Asia following in Q4, she said. Yahoo is projecting $170 million in revenue this year stemming from the Microsoft alliance, up from $32 million in 2010, Chief Financial Officer Timothy Morse said. Yahoo’s keyword search revenue declined 18 percent in Q4, company officials said. “It’s only been the last couple weeks that it’s logical that new advertisers jump in” with the new U.S. platform, Bartz said.

Yahoo and its affiliate partners have encountered “more bumps than expected as they learned to operate in a new unified marketplace,” Bartz said. The marketplace isn’t yet producing the “click yield we had hoped” for and it’s going to take two quarters to “get to the financial model we established for the alliance,” she said. “There is a lot of work ahead, especially for Microsoft, as they invest in their marketplace science team and technology."

Some analysts had expected Yahoo to be experiencing the benefits of its Microsoft alliance already, especially in revenue per search. “We still don’t understand why this hasn’t happened and I'm not giving them the benefit of the doubt that it will be magically fixed by the middle of the year,” an analyst said.

Yahoo’s Q4 profit rose to $312 million from $153 million a year earlier despite a decline in revenue to $1.2 billion from $1.26 billion a year earlier, the company said. Analysts had been forecasting $1.19 billion in revenue. Yahoo’s Q4 display advertising sales rose 16 percent from a year earlier to $635 million, the company said. Yahoo projected Q1 sales of $1 billion to $1.08 billion as it faces $61 million in revenue “headwinds,” those from previous business, Morse said. That includes $36 million in revenue from the Microsoft alliance and $25 million from “stepdowns” in broadband deferred revenue amortization in fee rates and the impact of divested businesses, including HotJobs. Yahoo shares closed down 2.79 percent on Wednesday at $15.57.