Yahoo (YHOO) CEO Marissa Mayer
Started as CEO: July 17, 2012
Total Return of YHOO: +142%
Total Return of S&P 500: +34%
Marissa Mayer certainly has brought excitement back to the pioneering Internet media company Yahoo (YHOO).
Unfortunately, revenues haven’t followed.
Growth in the company’s core display advertising business has stagnated despite Mayer’s acquisition spree, adding about 30 companies including the $1.1 billion whopper buyout of popular blogging site Tumblr. Henrique De Castro, who worked with Mayer at Google (GOOG), was supposed to be Yahoo’s liaison with Madison Avenue.
But De Castro was ousted by Mayer, who argued that he wasn’t a good “fit” … which makes his $40 million severance package especially galling to investors.
Mayer, who is taking on De Castro’s job herself, might be the luckiest CEO in corporate America. YHOO stock has soared over the past year as investors became more enthused over Mayer’s aggressive strategies.
However, it’s Yahoo’s holdings in Alibaba and Yahoo Japan that have really pushed the growth. And Alibaba’s growth is starting to slow, plus an IPO is likely on the horizon, which would result in Yahoo losing most of it’s holdings in the Chinese Internet giant.
So unless Mayer can show some tangible results for her initiatives in the core business, the “sugar high” propping YHOO stock could turn into a brutal crash that could take Mayer down with it.
As of this writing, Jonathan Berr did not hold a position in any of the aforementioned securities. Follow him on Twitter at @jdberr.