Yahoo Gambles with Marissa Meyer’s Cards in Hand

Marissa Mayer and Mike Arrington at LeWeb 2010

Marissa Mayer (Photo credit: Leo Laporte)

Cover girl Yahoo CEO Marissa Meyer has been credited a great deal for doubling Yahoo stock price since she became CEO. The 38-year-old has in recent years made quite a number of acquisitions, citing strategic claims of these acquired companies in improving the overall user experience, but the real question that investors are asking is “how is Meyer really faring in bringing real value to the company?”

Thomson Reuters reports a 1% overall decline of third quarter revenue to about $1.1 billion and while this is unlikely to raise much concerns for now, this cannot go on indefinitely because this means that market share is being gnawed at somewhere faster than it is being gained. While Yahoo explains its lack of drive with its strategic realignment of its sales force and its focus on building agency relationships with advertisers, it does not have many quarters to keep playing the t + 1 game; of using time and trust as essential factors to keep investors at anticipating for better results in the next quarter or financial year.

Here is the truth of the matter: Yahoo is in the business of generating content experience with users and while there can be no limit to how much each eyeball can view online, there are always the laws of diminishing marginal utility of consumption as well as limited attention span and reach at play. Yahoo has spent a great deal of money in acquiring and revamping its user experience in the hope that the entire venture spent by the cash rich giant will reap dividends in the coming years.

Managerial Implications

Meyer has to be certain of what she is doing and continue to keep investors “invested” in her plot, because this is all that they are buying at $35 a piece now. There are two big rocks for Meyer to seriously consider:

One, strategic management entails that an acquisition needs proper integration in order for it to recognise cost synergies. Perhaps the nature of the content experience ambit allows for Yahoo to acquire companies and manage their revenue stream without having to worry too much about synchronicity or integration. Or perhaps it could have already taken steps to trim the areas that are excess. Nothing has been mentioned from Yahoo on how Meyer seeks to achieve cost synergies from the giant shopping bag of companies that she has acquired. At the end of the day, it is not how big the shopping bag is or what items are within, but how are those items going to bring value to investors.

Two, the essence of time. By the time the revamp is in that sense complete, the industry may have well moved into another new game set and leave a level of obsolescence that will be detrimental to Yahoo’s financial health as a lack of ROI kicks in. By that time, it will be difficult to use charm to save the current media darling.

J.CJ

Follow the Magazine:
https://businessleadershipmanagement.wordpress.com/subscribe-follow-the-magazine/
(After you have filled in your email address in the column at the right hand side of the screen, a confirmation email will sent to your email address. You will have to confirm it before subscription begins)

Follow us on Twitter:
https://twitter.com/BusinessLeaders

Like us on Facebook:
https://www.facebook.com/BusinessLeadershipManagement

**As part of the Magazine’s drive to reward subscribers/followers, we will be providing subscribers/followers special access to exclusive content which will not be otherwise available to normal visitors. Please be sure to subscribe to the Magazine. Many visitors have given us positive comments that they will be bookmarking the site, but as the system is unable to capture a working email address to which the passcodes for exclusive content will be sent, they will miss out on this content. Do note that passcodes are locked to each exclusive content, not a one-for-all access, so do provide a working email address that you check regularly so as not to miss out on them!
Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s