Mayer’s Message at Yahoo Is Still Fuzzy

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When Marissa Mayer took the helm at Yahoo (NASDAQ:YHOO) back in mid-July, it definitely sparked lots of excitement. Consider that the shares went on to gain about 27% since her arrival.

Yet Wall Street is already cooling off a bit. On the company’s latest earnings report, the shares are off about 2.6% to $19.78. This was the case even though the company posted growth in revenue for the first time in four years (up 1.6%).

Investors, however, seemed more interested in getting a sense of Mayer’s strategic vision for Yahoo. Unfortunately, her plan is still amorphous.

It’s true that she hasn’t been on board for long. If anything, she needs to first understand the problems at Yahoo — and it certainly has many.

On the earnings call, Mayer noted that she has made progress on streamlining the bloated organization. She has instituted new employee reviews and systems to track the progress of apps. She has also made moves to cut back the bureaucracy.

Of course, Mayer talked a lot about the importance of product innovation. To this end, she has revamped the email and Flickr products. She has also struck three acquisitions — for Stamped, OnTheAir and Snip.it — to bolster the mobile engineering ranks.

While these moves are smart, Yahoo still faces big challenges. Consider that in Q4, the display ad business fell by 5%. The segment accounts for about 40% of revenues. However, it is coming under tremendous pressure from rivals like Facebook (NASDAQ:FB) and Google (NASDAQ:GOOG).

This is why Mayer is so focused on creating new “daily habit” products. These are the key to ad growth.

But it’s not easy to create breakout hits. Even top operators like Facebook have stumbled, as seen with its recent Poke app.

In light of this, it should be no surprise that Mayer believes that it will likely take “multiple years” to get Yahoo on a strong growth path.  So for investors, the gains in the stock may already have played out for now.

Tom Taulli runs the InvestorPlace blog IPO Playbook, a site dedicated to the hottest news and rumors about initial public offerings. He is also the author of “How to Create the Next Facebook” and “High-Profit IPO Strategies: Finding Breakout IPOs for Investors and Traders.” Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.

Tom Taulli is the author of various books. They include Artificial Intelligence Basics and the Robotic Process Automation Handbook. His upcoming book is called Generative AI: How ChatGPT and other AI Tools Will Revolutionize Business.


Article printed from InvestorPlace Media, https://investorplace.com/2013/01/mayers-message-at-yahoo-is-still-fuzzy/.

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