Calls for Yelp Inc (NYSE:YELP) Takeover Erupt after Weak Earnings Report

Yelp Inc (NYSE:YELP) posting second-quarter loss only went to reaffirm earlier suggestions that the company needs to merge with another big company if it is to remain relevant on the advertising front. The company finds itself in a tight spot having struggled to win advertising dollars as competition from the likes of Google Inc (NASDAQ:GOOGL) and Facebook Inc (NASDAQ:FB) remain stiff.

Concerns over Slowing Business

Yelp Inc (NYSE:YELP) posted a revenue headcount of 30% for 2015 down from a previous guidance of 40% growth. The company also lowered its full-year guidance by 5% to between $544 million and $550 million. Reduced outlook was down to the company finding it had to add more sales staff. Less staff at hand could lead to fewer ads sold translating to reduced sales.

Yelp Inc (NYSE:YELP) also continues to depict weaknesses on its ability to attract young employees who are vital to its growth as competition from the big players continues to pound more pressure. The company shed more than 25% in market value after providing a revenue outlook that fell short of what the Street was expecting. The recent plunge in the market has seen the stock valued at just a quarter of its record highs registered last year.

Potential Merger Partners

Analysts believe the only way out of the current mess is Yelp Inc (NYSE:YELP) merging with another company if it is to trigger growth in any way. Such a move is not new, the company having put itself for sale in May but decided against the same later. Amazon.com, Inc. (NASDAQ:AMZN), Yahoo! Inc. (NASDAQ:YHOO) and Priceline Group Inc (NASDAQ:PCLN) are seen as possible buyers that may be willing to take Yelp onboard.

CEO, Jeremy Stoppelman has already said he intends to operate the company independently as increased competition for workers becomes a big problem. Google has also put more pressure on Yelp Inc (NYSE:YELP) having changed the way listings appear on search engine considerably affecting listing of restaurants.

Yelp Inc. (Yelp), incorporated on September 03, 2004, connects people with local businesses by bringing ‘word of mouth’ online and providing a platform for businesses and consumers to engage and transact. The Company provides local business review sites. The Company had approximately 71.2 million cumulative reviews of different type of local business in 29 countries as of December 31, 2014. Yelp provides a platform for consumers to share their everyday local business experiences, through reviews, tips, photos and videos, and engage directly with businesses, through reviews and its Message the Business feature. The Company’s platform also provides businesses with a variety of free and paid services that help them engage with consumers.

The Company has a range of communities of contributors across the world that contributes the content on its platform. These contributors provide firsthand information about local businesses in the form of reviews and ratings, tips, photos and videos. The Company has Yelp communities in Argentina, Australia, Austria, Belgium, Brazil, Canada, Chile, the Czech Republic, Denmark, Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, Mexico, The Netherlands, New Zealand, Norway, Poland, Portugal, Singapore, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States. The reviews contributed to its platform cover a set of local business categories, including restaurants, shopping, beauty and fitness, arts, entertainment and events, home and local services, health, nightlife, travel and hotel, auto and other categories.

Local Advertising

The Company provides both free and paid business listing products to a range of businesses. In addition, it enables businesses to deliver targeted search advertising to large local audiences through its Website and mobile app. The Company enables businesses to create a free online business account and claim the page for each of their business locations. With their free business accounts, businesses can view trends (statistics and charts of the performance of their pages on its platform), use the Revenue Estimator tool (to quantify the revenue opportunity Yelp provides), message customers (to reply to reviews either publicly or privately), update information (address, hours of operation) and offer Yelp Deals and Gift Certificates.

The Company’s enhanced profile solution eliminates search advertising from a business’s profile page and allows the business to incorporate a video clip or photo slide show on the page. Businesses can also promote a desired transaction of their choosing – such as scheduling an appointment or printing a coupon – directly on their business listing pages with the Company’s Call to Action feature. For businesses with 10 or more locations, the Company’s branded profile solution offers the ability to incorporate a video clip or photo slide show, as well as a Call to Action Button, on each location’s business listing page. The Company allows businesses to promote themselves as a sponsored search result on its platform and on the listing pages of related businesses. The Company provides restaurants, nightlife and certain other venues with the ability to offer online reservations directly from their Yelp business listing pages through its SeatMe feature, which also offers front-of-house management tools. The Company also offers Yelp Reservations, a free tool with basic reservation functionality for businesses in the restaurant and nightlife categories.

Brand Advertising

The Company offers advertising solutions for a range of national brands to improve their local presence in the form of display advertisements and brand sponsorships. Its national advertisers include brands in the food and restaurant, automobile, financial services, logistics, consumer goods and health and fitness industries. The Company offers both graphic and text display advertisements on its Website and mobile app. The Company offers businesses display advertising opportunities on its mobile app through display ads that are optimized for the mobile experience, on its home page and on individual Web pages. The Company’s fixed-price brand sponsorships provide businesses with exclusivity over a section or advertisement placement on Yelp for a fixed period of time. Brand sponsorships are generally associated with a particular platform – desktop, mobile Web or mobile app.

Other Services

In addition to the business listing and advertising products, the Company also offers a range of features and consumer-interactive tools to facilitate transactions between consumers and the local businesses they find on Yelp. The Yelp Platform allows consumers to transact directly on Yelp. Through partnerships with companies, including Eat24, Booker, Hipmunk and CellarPass, consumers are able to complete food delivery transactions, book spa and salon appointments, and make hotel bookings and winery reservations. The Company’s Yelp Deals product enables local business owners to create promotional discounted deals for their products and services, which are marketed to consumers through the Company’s platform. Its Gift Certificates product allows local business owners to sell full-price gift certificates directly to customers through their business profile pages.

The Company competes with Google, Yahoo! and Microsoft.

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