Yahoo CEO's juggling act

Does Marissa Mayer have the vision to bring the company back?

By Jonathan Berr Oct 22, 2012 3:13PM
Updated Monday 4:35 p.m. ET

Yahoo
(YHOO) CEO Marissa Mayer has got to convince Wall Street that she's the right person with the right plan to lead the Internet portal back to its former glory. And while it will take some time to prove that point, Mayer got off to a good start Monday.

When Google (GOOG) reported worse-than-expected results last week, many thought that wouldn't bode well for Yahoo. This naysayers were wrong. Yahoo's net income rose to $3.16 billion, or $2.64 per share. Excluding one-time items, profit was 35 cents. Revenue excluding traffic acquisition costs -- the fees Yahoo pays to partners -- rose 2% to $1.09 billion. 
The earnings beat Wall Street's low expectations of profit of 25 cents on revenue of $1.08 billion. Investors need to remember that it's not a big accomplishment to outperform expectations if people don't expect much. 

Mayer, who joined the Sunnyvale, Calif., company in July from Google, has got about $2 billion in cash at her disposal. Some investors, including activist and board member Daniel Loeb, want the Internet publisher to pay a special one-time dividend.

While everyone likes cash -- Jimmy Fallon's Capital One (COF) commercials prove that point -- that's not a strategy. Investors will want to know what comes next, the key question Mayer has got to answer.
Image: Man with laptop (Image Source/SuperStock)
Media reports indicate that Mayer is focused on the "user experience." That's good because Yahoo's main sites (news, sports and finance) are in dire need of a redesign. A bigger issue is its content strategy. Yahoo partners with news outlets such as CNBC and ABC News to provide content and creates some on its own, which is very good. Advertisers pay higher rates for exclusive content than for articles that appear on multiple sites. The downside, of course, is that creating original content can be expensive.

Mayer is like a plate-spinner at the circus who needs to keep a close eye on everything to make sure its running correctly, because if one plate falls to the ground, odds are that others will follow.

--Jonathan Berr does not own shares of the listed stocks.  Follow him on Twitter @jdberr. This post has been updated with earnings data.

More from Top Stocks


2Comments
Oct 22, 2012 5:21PM
avatar
She will fail!  She got luckly with Google. 
Oct 22, 2012 7:16PM
avatar
She needs to sponsor a NASCAR team- get that huge untapped market to use Yahoo.
Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

111
111 rated 1
272
272 rated 2
474
474 rated 3
656
656 rated 4
638
638 rated 5
699
699 rated 6
623
623 rated 7
486
486 rated 8
260
260 rated 9
128
128 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
DYNDYNEGY Inc10
TAT&T Inc9
VZVERIZON COMMUNICATIONS9
EXCEXELON CORPORATION8
AAPLAPPLE Inc10
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.