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
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