Marissa Mayer Sets Her Own Course for Yahoo

by Will Ashworth | August 31, 2012 12:46 pm

It didn’t take Marissa Mayer long to put her stamp on Yahoo (NASDAQ:YHOO[1]). Earlier this week, she hired Kathy Savitt[2], a veteran with management experience at consumer, retail and technology companies, as chief marketing officer.

[3]Savitt’s most recent job was as CEO of Lockerz[4], a social media site that lets fashionistas earn discounts on top brands by sharing their fashion favorites. If this hire is any indication of Mayer’s game plan, it appears that an e-commerce push is underway.

And venture capitalist Dave McClure, who has worked with some of the tech industry’s biggest success stories, seems to think this is a good idea. Recently, on Bloomberg TV, he suggested that Mayer should run with the gender-card and pursue a female audience by acquiring properties catering to fashion and shopping. After all, women influence 85% of all purchasing decisions.

In a separate blog post intended for Mayer[5], McClure detailed this possibility even further, recommending acquisitions or partnerships with names like Pinterest, ShoeDazzle, BabyCenter, Oprah, People, Ellen Degeneres or Martha Stewart.

It’s a long list, but you get the idea. Lockerz falls right into that same category. If not for the fact that Liberty Media (NASDAQ:LMCA[6]) is already a huge backer of Lockerz, it would be an ideal target. Because while Yahoo’s finance and sports properties do very well, there’s nothing focusing on women — and that presents opportunity.

On top of that, in May, Yahoo agreed to sell half its 40% stake in Alibaba for $7.1 billion, and will sell the rest once the Chinese e-commerce giant goes public.

Investors were confident that Yahoo would use the proceeds to buy back stock, but not so fast. In a recent 8-K filing with the Securities and Exchange Commission, the company indicated that Mayer’s strategic review could very well result in a change of plans including not returning the money shareholders[7].

Instead, an acquisition could be on the horizon. Assuming an after-tax haul of $5 billion, Yahoo would have $7 billion in cash and no debt in which to make a purchase. And while critics rightly note that the company has a poor history of acquisitions, Mayer’s history is a little better.

She was the Google (NASDAQ:GOOG[8]) exec behind the $151 million purchase of Zagat in 2011, for example. Zagat has enabled Google to enhance its local information offerings — something it’s struggled with over the years.

Mayer sure isn’t going to spend money just to throw around cash, but rather to help play to her strengths and develop new consumer-related products.

And that brings us back to the Savitt addition. Prior to founding Lockerz, Savitt spent three years at American Eagle (NYSE:AEO[9]) as its chief marketing officer, four years before that as vice president of strategic communications at Amazon‘s (NASDAQ:AMZN[10]) website and almost 17 years in public relations.

She not only understands consumer products, but also the importance of quality communication — which is good, because if there’s any firm that needs to improve its message, it’s Yahoo.

Just look at the company’s investor relations website[11], for example. It provides no additional information in its annual report other than the 10-K and no investor presentations to speak of this year. Frankly, it looks like it was thrown together by a tenth-grader. Business has been tough at Yahoo the past few years, but it can still afford to put forth a more enthusiastic presentation. Hopefully, Savitt will take care of that shortly.

All-in-all, the path Yahoo is paving looks pretty clear. Early indications do suggest that Mayer expects Yahoo’s employees to work at a relentless pace in a quest to redefine and re-purpose the company — despite a few fun perks[12] here and there.

And while that is true, and many in the media focus on her taskmaster approach to business, it’s the hiring of Savitt that reveals her true priority: Find talented people who understand the consumer — because the consumer won’t wait forever.

As of this writing, Will Ashworth did not own a position in any of the aforementioned securities.

Source URL: https://investorplace.com/2012/08/marissa-mayer-sets-her-own-course-for-yahoo/

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