The New
York Times says that Yahoo’s newest Chief Executive Officer, Marissa Mayer
has done more good for the company in her first six months than any of her
predecessors have contributed to the company. Investors have been waiting for
good news from the company for some time now and the hiring of Mayer might just
be the answer.
On January 28, Yahoo Inc.’s
financial results for the fourth quarter were released showing off Mayer’s
turnaround for the company was in progress with a 2% increase in net revenue to
$1.35 billion, beating Wall Street’s expectations by 30% for the first time in
years. Yahoo also experienced a raise in stock price to $20.91 in after-hours
trading and a 36% overall gain in stock since Mayer began. Although Yahoo saw
an increase in its revenue this year due to redesign of its web services, Mayer
believes it is going to be a long
journey to restore the Internet company’s fortunes causing analysts and
investors to be skeptical. With tough competition from Google and Facebook,
Mayer must show expansions in search or mobile technology to provide evidence
of a future growth plan.
Investors are left asking does
Mayer have the experience, leadership and innovation that Yahoo needs to
survive? Mayer has presented some of her plans to analysts and investors to
regain their confidence. Mayer plans to renew focus on its people, products and
business strategy, which have all diminished over the years. Mayer believes the
site will be more attractive with better-qualified, more motivated people
behind it. This upturn in internal operations and changes to the website’s design
and services are assuring but aren’t enough to restore faith in a declining
Internet company according to investors.
Mayer’s improvements in Yahoo’s
search business are being outshined by its continuous decline in their display
advertising revenue, the business’s most profitable area. Analysts are concerned
as Yahoo continues to lose share in a core business function and EMarketer
predicts Yahoo’s share of the U.S. display ad market will fall to 8% in
2013 from 9% in 2012 as competitors continue to increase shares. To show
substantial growth and increase shareholder’s perceptions, Mayer plans to
increase the company’s mobile presence and display ad business by creating more
personalized content and increased product innovation. Yahoo has about 700
million monthly users, which is steadily declining as more users pursue
other smartphone apps. For example Facebook has successfully created one of the
most popular apps. This leaves Mayer to take on the challenge of surpassing
companies like Facebook and Google in the market by creating useful, personal
and innovative apps for users to access mail, news, and other daily needs.
According to an article from the Los Angeles Times found on StockTwits, Mayer’s most
recent focus will be upon creating a “dozen or so applications that people
use all the time on their phone” to increase usage time therefore, advertisers will
spend more money.
Because Yahoo’s current focus towards
investors is perceived future growth from mobile innovation, it is growth
investors who the company will be targeting. Although a risky gamble, Yahoo is
expecting that revenue will increase between 4.5 and 4.6 billion in the
upcoming year indicating an annual growth rate of .7% to 3%. Today the stock
price of $21.23 continues to rise since the release of Q4’s financial results. Finance
Chief, Ken Goldman gives hope to investors as he alerts them to expect an
investment phase in the first half of 2013 due to Yahoo’s plans for product
engineering and marketing to ensure revenue growth.
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