TOKYO – Yahoo Japan Corp., armed with $4 billion in cash, is putting the nations smartphone advertising and online shopping companies on alert as it searches for growth at home.
In the past five years, its sales growth was a third of the average among peers, according to data compiled by Bloomberg, as the operator of Japans most-visited Web portal failed to extend its dominance to smartphone services.
Japans ad sales on those devices are projected to almost triple by 2017.
Yahoo Japan may find a logical target in blogging service CyberAgent Inc. as its smartphone ad sales surge, said Iwai Cosmo Holdings Inc. Buying the rest of Japan Net Bank Ltd. would add online banking services to help catch up with Rakuten Inc. in Internet shopping, said Ichiyoshi Research Institute Inc.
The future is mobile, Amir Anvarzadeh, a manager for Japanese equity sales at BGC Partners Inc. in Singapore, said in a phone interview. If theyre looking to expand into any area within their own realm, it has to be mobile.
The company this month hired Ryu Hirayama, former vice president of investment banking at Goldman Sachs Group Inc. in Tokyo. He advised on mergers and acquisitions at the bank, according to a person with knowledge of the matter.
Yahoo Japan, whose biggest shareholders are SoftBank Corp. and Yahoo! Inc., is targeting a 77 percent jump in operating profit within six years by expanding in e-commerce and offering more smartphone and tablet-computer services. Ad revenue from those devices made up just 9 percent of sales last quarter.
Acquiring CyberAgent, owner of the Ameba blogging service, and Start Today Co., a $2.3 billion operator of online clothing shops, would help Yahoo Japan attract users, said Mitsuo Shimizu, an analyst in Tokyo at Iwai Cosmo.
CyberAgent, Japans biggest smartphone advertising agency by volume, last quarter generated 60 percent of its revenue from smartphones and services such as gaming that are tied to the devices. It has a market value of $1.6 billion.
Yahoo Japans target areas should be somewhere on the smartphone, said Naoshi Nema, an analyst at Cantor Fitzgerald LP in Hong Kong. Their online shopping is not as strong as Rakutens. They may want to enforce that area because it has very good synergies with smartphones.
Selling more goods online drives up Web visitors and swells ad sales. Portal owners such as Yahoo Japan typically take a cut of transactions executed through their sites.
Boosting Yahoo Japans 41 percent stake in Japan Net Bank may accelerate online expansion, said Hiroshi Naya, an analyst at Ichiyoshi Research.
The Internet bank, Japans first, boosted profit more than fourfold last quarter. Sumitomo Mitsui Banking Corp. also owns a 41 percent stake.
Kimihiko Sato, a spokesman for Yahoo Japan, declined to comment.
Representatives for Start Today and Japan Net Bank also declined to comment. CyberAgent spokeswoman Sonoko Miyakawa said the company has no plan to sell its advertising business.
Within two years, mobile devices will surpass personal computers as the primary method of accessing Yahoo Japans services, the company said in June.
Currently, less than a quarter of users tap its shopping services with smartphones.