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Yahoo
Yahoo's Mayer Needs To Be Hitting on All Cylinders

By Jennifer LeClaire
July 17, 2013 10:37AM

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Yahoo's Marissa Meyer has a number of opportunity areas for growth in both the near- and mid-term but she probably can only get incremental revenue out of them in the next quarter or two, said Greg Sterling, principal analyst at Sterling Market Intelligence.
 



It's been a year since Yahoo wooed Marissa Mayer from her comfortable position at Google to serve as CEO. During that time, she's made plenty of big moves, including acquiring Tumblr in a $1.1 billion deal. But, is it working?

It's too soon to tell for sure, but Yahoo's Tuesday earnings report offers some clues that it's not working as quickly as shareholders would like, as the company's second quarter revenues fell slightly below analyst expectations. In response, Wall Street analysts are now lowering estimates for the third quarter and full-year results. But, Mayer isn't daunted by the slow turnaround.

"I'm encouraged by Yahoo's performance in the second quarter," she said. "Our business saw continued stability, and we launched more products than ever before, introducing a significant new product almost every week."

Mayer's Rapid-Fire Changes

She rattled off a list that included the new Yahoo News, the new Yahoo Sports app, the redesigned Yahoo search, the new Flickr, the new Yahoo Mail for tablet, the Yahoo Weather app, and the new Yahoo app with Summly. She said users responded with increased usage and engagement.

Beyond Mayer's list, Yahoo also announced two new advertising formats: Yahoo Stream Ads offer native ads as part of news stream while Yahoo.com Billboard ad is designed to deliver richer content interactions. The company also increased its content partnerships, adding ABC News, CNBC and Conde Nast Entertainment.

During the second quarter, Yahoo made nine acquisitions to strengthen its products, content offerings, core technology and talent: Summly, Astrid, Milewise, Loki Studios, Go Poll Go, PlayerScale, Rondee, Ghostbird Software and, of course, Tumblr.

Yahoo's Growth Opportunities

As Greg Sterling, principal analyst at Sterling Market Intelligence, sees it, Yahoo has a number of opportunity areas for growth in both the near- and mid-term. However, he told us, the search engine company probably can only get incremental revenue out of them in the next quarter or two.

"Yahoo can do much more in mobile. Marissa Mayer has invested heavily in mobile and user numbers and engagement appear to be paying off," he said. "But there's more that can be done."

Sterling also pointed to the company's core: search. Search revenue was up in Yahoo's latest earning report, and he said it could be an area of continued growth. The question, he said, is one of degree.

"Video was repeatedly mentioned as an area where advertiser demand exceeds impression supply," Sterling said. "This is another significant area of opportunity: more content and more traffic will help Yahoo."

When it comes to display, he called it more complex and more challenged for Yahoo. Nevertheless, he said it does appear there are also some improvements Mayer can make to drive revenue.

"All of these things taken together can generate revenue growth for Yahoo," Sterling said. "But it needs to be firing on almost all cylinders."
 

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