Yahoo's revival can continue
The Yahoo business news of the day is that CEO Marissa Mayer fired her first major hire that she made when she arrived from Google one and a half years ago. This is a powerful acknowledgement of a mistake on her part and ending a charade that needed to be ended. Henrique de Castro was responsible for reviving Yahoo's advertising clout and revenues. A fellow Google alum who played the role of big picture consultant there, by most accounts he was particularly ill-suited to doing the Madison Ave. shuffle, both in temperament and in availability. Smart sure, but not a good fit for perhaps Yahoo's most crucial challenge.
From this perspective this is a big positive. It will cost Yahoo significant bucks to buy out his contract, but he was not getting the job done apparently. Yahoo, which was the Google of the late 1990's, still has a search following that rivals Google even today. It's fully global to the extent one would want to be and its Yahoo Japan business is a valuable franchise. It has a balance sheet with 12.5 billion in shareholder's equity and 121 million of long term debt. What Yahoo does not have is the innovation that drives Google, the social network that runs Facebook, or any significant mobile reach. Advertisers want some if not all of these attributes.
Just on price alone Yahoo was bought here in May 2012 at $15.50, a mistakenly large position it turned out, as in a day of trading, the not so small size that was wanted was bought in the morning at one account and then again just before the market closed at another account, a memory lapse that proved to be fortuitous. The thought at the time was that the name recognition and balance sheet just did not deserve that price, it deserved more. Something had to happen was the guess here, and in July 2012 Marissa Mayer joined the firm as CEO, no prescience here, just luck. Now the stock trades at around $40 and still hasn't really solved its major challenges in any signicant way. It's just beginning.
With its investment in the Chinese internet search engine Alibaba that is expected to go public sometime this year, there is time to work on a fix to the core business. The news business is going through a revamping with name brand reporters such as Katie Couric and Michael Santoli. Couric may not sound like such a snag to many but she is very well known and professional. Santoli was a columnist at Barron's who is now Yahoo's senior financial reporter. How well known he really is cannot be discerned here, but he is certainly known here as he gave out his e-mail on his Barron's comments and actually responded to some of them, at least here.
Mayer knows the challenges that she has, and she is taking them on. Success is not guaranteed. There is certainly potential in the platform if it can be done right amidst formidable competition.
From this perspective this is a big positive. It will cost Yahoo significant bucks to buy out his contract, but he was not getting the job done apparently. Yahoo, which was the Google of the late 1990's, still has a search following that rivals Google even today. It's fully global to the extent one would want to be and its Yahoo Japan business is a valuable franchise. It has a balance sheet with 12.5 billion in shareholder's equity and 121 million of long term debt. What Yahoo does not have is the innovation that drives Google, the social network that runs Facebook, or any significant mobile reach. Advertisers want some if not all of these attributes.
Just on price alone Yahoo was bought here in May 2012 at $15.50, a mistakenly large position it turned out, as in a day of trading, the not so small size that was wanted was bought in the morning at one account and then again just before the market closed at another account, a memory lapse that proved to be fortuitous. The thought at the time was that the name recognition and balance sheet just did not deserve that price, it deserved more. Something had to happen was the guess here, and in July 2012 Marissa Mayer joined the firm as CEO, no prescience here, just luck. Now the stock trades at around $40 and still hasn't really solved its major challenges in any signicant way. It's just beginning.
With its investment in the Chinese internet search engine Alibaba that is expected to go public sometime this year, there is time to work on a fix to the core business. The news business is going through a revamping with name brand reporters such as Katie Couric and Michael Santoli. Couric may not sound like such a snag to many but she is very well known and professional. Santoli was a columnist at Barron's who is now Yahoo's senior financial reporter. How well known he really is cannot be discerned here, but he is certainly known here as he gave out his e-mail on his Barron's comments and actually responded to some of them, at least here.
Mayer knows the challenges that she has, and she is taking them on. Success is not guaranteed. There is certainly potential in the platform if it can be done right amidst formidable competition.
posted by John Borden at 2:54 PM
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