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By January 10, 2013 10 Comments

Yahoo! (NASDAQ: YHOO) Steers a Better Course with Mayer

Yahoo! (NASDAQ: YHOO) Steers a Better Course with Mayer

Yahoo! (NASDAQ: YHOO) Steers a Better Course with Mayer

There may be hope yet for drama laden internet giant Yahoo (NASDAQ: YHOO). In what has been something of a joke in Silicon Valley, the revolving door leading to the CEO’s suite may finally be a thing of the past. It is no exaggeration to say that Yahoo has had five chief operating officers in the past two years. Yes, five, and that includes two interim chiefs. It started with the very messy firing of Carol Bratz in 2011 and lead to the eventual hiring in July of 2012 of current CEO Marissa Mayer, Google’s (NASDAQ: GOOG) former chief of location and local services. Bartz was hired to revive the company in 2009 and when she could not deliver to the satisfaction of the board of directors she was summarily dismissed over the telephone in September of 2011. Ms. Bartz served a very shaky two year tenure attempting to correct the drift of the rudderless Yahoo. She was under a staggering amount of pressure to produce that escalated in her final months with the company.

Scott Thompson’s Short Term

Scott Thompson the former president of PayPal came on board three months after Bartz was let go. After only a few months, he found himself resigning. Turns out he had falsified his education credentials with the Securities and Exchange Commission. Not a very smart move. He said it was an accident. Surprisingly, no one bought his explanation. Enter Marissa Mayer, a vivacious, intelligent executive with a reputation for focus on detail. Sources say she wowed the board during her interview, so much so, that they actually saw light at the end of their troubled tunnel. Recognizing that lack of focus at the highest level has contributed to Yahoo’s myriad problems, resulted in a unanimous vote to hire the focus oriented Mayer.

Mayer’s Challenges

What exactly are the challenges facing the new chief of Yahoo? It is no secret that Yahoo is a company whose innumerable problems run deep. It is known for being a corporation that is unable to keep any new service or innovation under wraps. It has historically been an exercise in futility for the company to even try. Yahoo is the equivalent of a leaky ship and Mayer will have to address that issue quickly. Yet of all Yahoos’ quirky predicaments, that is the smallest problem by far. It has lostthe competition in search to Google. It is not at all competitive in banner ads with Facebook (NASDAQ: FB). As for shared images, Pinterest has left all other internet companies, including Yahoo in the dust. Analysts and shareholders have been left to wonder what exactly is Yahoo today. Mayer will have her hands full addressing the company’s identity crises and it will not be an easy task. After years of being adrift, defining Yahoo’s place in the larger scheme of things will be an immense challenge. Mayer has been tasked with turning around a company that has been failing for years in a market that it helped create.

Some experts are skeptical that Mayer can turn Yahoo around. They point to the fact that the company has fallen so far behind that it is unrealistic to think that it will catch up to, let alone surpass leaders in existing markets. Most analysts disagree and point out that it is not all bad news for the company. The company is the source of a staggering amount of web traffic. Yahoo also looks good on paper with a strong balance sheet and a tidy cash flow. The bottom line is that Yahoo is not fated to fail. It can make a comeback. Other corporations have managed to achieve amazing turnarounds.  Confidence in Mayer is high. The consensus held by many is that she can make an enormous dent in Yahoo’s ongoing issues. As far as investing in the company, some analysts have a neutral status on its stock. Others are encouraging a buy. The price is right and with new management at upper levels the future is looking brighter by the minute. It should be a nice long-term investment if you are willing to wait out the storm.

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