Marissa Mayer's Yahoo turnaround: Still to come
The knock against Yahoo (YHOO) CEO Marissa Mayer has been that the gains in her company's stock price were mostly the result of investors' enthusiasm over Yahoo's Alibaba (BABA) investment. After all, growth in the company's core Internet media business has been stagnant for years.
Now that Yahoo has announced plans to spin off its 15 percent stake in the Chinese Internet giant, worth about $40 billion, all eyes have turned back to Mayer -- and the pressure on her to deliver improved operating results is intensifying.
Ever since Mayer was recruited to Yahoo in 2012 from Google (GOOG), she has brought some pizzazz to a company many thought had long ago seen its best days. But her efforts haven't done much for the Sunnyvale, California, company's bottom line. During the most recent quarter, net income was $166.3 million, or 17 cents per share, compared with $348 million, or 33 cents, a year earlier. Revenue was little changed at $1.25 billion.
The 39-year-old CEO is now betting that the company's display advertising business, which has slumped for eight of the past nine quarters, will return to growth this year, thanks in part to better quality in its content and improvements in services such as Yahoo Mail. She also has high hopes for what she has dubbed MaVeNS (mobile, video, native and social), new businesses where the payoffs aren't guaranteed.
"While the declines have continued, they are slowing," said Mayer in a conference call yesterday with Wall Street analysts. "In Q3, we had seen 6 percent and 5 percent declines, respectively. Our ads sold in quarter increased approximately 17 percent. However, our price-per-ad decreased approximately 20 percent."
Of course, Mayer's MaVeNS vision is easier said than achieved because many other top Internet companies including Facebook (FB) are trying to do the same thing (Facebook's progress will be apparent when it reports results after the market closes on Wednesday). However, the billions Yahoo will get from the Alibaba deal will enable Mayer to write plenty of checks to build up the company's already extensive array of content and offerings.
According to Yahoo, the MaVeNS businesses generated $380 million revenue during the fourth quarter, most of it ($254 million) coming from mobile. Yahoo's monthly mobile audience of 575 million is one of the largest. Not surprisingly, the company keeps looking for acquisitions to help expand these enterprises.
"One key factor to returning display to growth is to grow engagement on Yahoo Mail and our digital content across all platforms," Mayer said. "In Q4 we worked hard to enhance and improve both."
The company's digital "magazines" saw a 39 percent audience increase, and streams of the concerts it offers in conjunction with Live Nation saw a 65 percent quarter-over-quarter increase. Recent comScore data showed Yahoo Parenting and Yahoo Travel at No. 1 in their audience categories, while Yahoo Style ranked second.
Under Mayer, Yahoo has been in cost-cutting mode and has shuttered 12 offices and pulled the plug on 75 products. She said all her efforts are designed to turn an iconic company "into greatness."
Such bold proclamations, of course, will take time to realize, a commodity not often in abundance on Wall Street.