Why Yahoo and Marissa Mayer's Over Reliance On Alibaba Could Spell Trouble

DavidGilbert99 writes "Marissa Mayer has been in charge at Yahoo for one year now. In that time she has seen the share price rise 70% and she's made some headline grabbing acquisitions — notably Tumblr for over $1 billion last month. However, look beneath the surface and things are not going so well. In this week's quarterly results, we saw ad sales fell by 12% year-on-year and as Alistair Charlton says in IBTimes UK: ' Yahoo earned $846m in cash by redeeming its shares in the group, representing a significant chunk of Yahoo's $1.07bn revenue for the quarter, down 1% on last year. ... The next few years will be a balancing act as the stabilizing wheels are removed and Yahoo, with dozens of acquired startups patching up the rust, will have to make progress under its own steam.'"

Comments

Income source

[schneidafunk]

What exactly does Yahoo sell? Do they even have a mission statement? Personally I do not understand why they didn't sell to Microsoft when they had the chance.

Re:Income source

[plover]

Advertising revenue and fees for operating online stores, as far as I can tell. They probably sell business intelligence data from their tracking efforts, too.

Re:Income source

[Anonymous Coward]

Ads. The same Google sells and Microsoft's Bing group sells. Yahoo is behind in the game, but the balance can change very quickly. The reason for that being that in the end it's about how much traffic you get and social network effects can make traffic grow or shrink at an exponential rate.

Re:Income source

[xxxJonBoyxxx]

>> What exactly does Yahoo sell?

As a Yahoo webmail user, it appears that they sell an annoying little ad that looks just like an email entry and gets inserted into your list of emails. When people click on it (I've done it myself a couple of times by accident), some stupid mark gets charged and the clicker makes a mental note to never buy anything from that advertiser again.

Re:Income source

[Minwee]

What exactly does Yahoo sell?

Yahoo! Sells! Exclamation! Marks!

Re:Income source

[GodfatherofSoul]

Welcome to Wall Street 2100, the sequel. I watched a pretty good panel discussion about the subtle change in our financial sector from investment- to trader-focused. People aren't worried about profit or fundamentals or products. Companies aren't even trying to sell themselves to the individual investor anymore since it's all about the big boys slinging massive HFTs. It's about how your stock is playing in the market. I always wondered how so many ubersmart people could be duped by Enron. The reality is, they weren't. They just didn't care so long as the checks continued to clear.

Re:Income source

[Anonymous Coward]

I came here for extremely sexist, demeaning, and true comments about their CEO taking on the burden of viewing the world completely different than she did before she was hired and immediately had her hormones and priorities flipped over by a new baby. Seriously, I've known many women who have gone from the care-free life of an American spoiled brat to a mother who had to make real life decisions. They simply don't give a shit about the stuff they cared about before baby--no way around it. She is collecting her check and living life--Yahoo should get a new CEO.

Re:Income source

[Anonymous Coward]

Given that the previous CEOs were much worse than her, I would say your advice is shit.

Can she give Yahoo some new life ? I seriously doubt it. They lack technology "top guns" (superstart developers). Their search engine is outsourced to MS and it is frankly shite.

What she could do is to take Android phones and try to innovate and differentiate. Maybe less built-in, dragnet spying ? Maybe "due process, rule of law" and so on ? But I am sure she is too much immeresed into the GoogleNSAplex to use this massive opportunity.

But let's dream for a few seconds: Whatabout making a fully encrypted YahooDroid ? Government only gets access after performing twenty CPU hours of workload. That would still allow for Law enforcement to get access (they can force yahoo to provide them access), for SPECIFIC devices as opposed to "let's suck in the data of 1000 million Android users and store it forever".

But then, Mayer is already part of the ruling classes and what they want is as much control as they can get. They want to shaft the little guy to further their insane ambitions. That will do it for yahoo, as the world needs only one GooNSA.

Re:Income source

[ArhcAngel]

Switched to Yahoo webmail a month after Microsoft bought Hotmail. I eventually opted to pay the $20 a year to get rid of the ads. I don't miss the $20 and not having every email tagged with Do You Yahoo or any ads is well worth the costs. I have a Gmail account but rarely use it for email.

Yahoo! Mission Statement

[eldavojohn]

What exactly does Yahoo sell? Do they even have a mission statement?

From several investor calls she has said:

“Yahoo is about making the world’s daily habits more inspiring and entertaining,”

Which is a little more positive and slightly better than Yahoo!'s previous mission statement:

"Now open up all your little fucking birdie mouths because Papa Yahoo!'s got a big juicy unwanted browser toolbar to slam down your goddamn throats."

Re:Yahoo! Mission Statement

[MysteriousPreacher]

âoeYahoo is about making the worldâ(TM)s daily habits more inspiring and entertaining,â

Interesting articles printed on toilet roll? Holidays that take themselves? Little toy dogs that can bark my name? A help page that isn't a compendium of broken or misleading links?

Confusing luck with talent

[Anonymous Coward]

Most of those "superstar" business executives are no better than their college classmates. They just happened to land in the right company at the right time.

I don't believe that Mayer has CEO super powers. She was lucky to have worked at Google at a time when it was poised to take off. Putting her in charge of a wounded beast like Yahoo is a completely different ball game though. I don't know that she actually has the chops to handle that kind of situation.

The problem with Yahoo is that it's an aimless company. Essentially an answer to a question nobody asked. Everything that used to make Yahoo special, somebody else now does better. They either get back on top in search (unlikely) or find something new to excel at.

Re:Confusing luck with talent

[Pinky's Brain]

Here's a different idea ... they slim the fuck down to focus on the parts of the business turning a profit and liquidate assets not to pay beyond market price for startups but simply to pay dividends to shareholders. Let those shareholders find new uses for the money, of course then Yahoo would be a small company and Mayer would be grossly overpaid ...

Shareholder diligence doesn't exist any more, the lunatics are running the asylum.

Re:Confusing luck with talent

[TheRaven64]

There's an old stock market scam. You open 100 accounts. You invest randomly. After a week, roughly half will be turning a profit. You close the ones that aren't, and do another round of random investing. Again, roughly half make a loss, half a profit. After a few rounds of this, you have lost quite a lot of money, but you have one account that looks really stellar - huge returns on investment. You then open this up to investment, with the disclaimer that past performance does not guarantee future results, and wait for the money to roll in (you can then invest this in your own companies, or just take it and run away).

Much the same applies with CEOs. You take a few thousand business graduates each year and put them in management positions. They all make random decisions. Then you cherry pick the handful that have made decisions that turned out well. Then you say 'Superstar CEO, please pay enormous salary'.

Re:Confusing luck with talent

[Anonymous Coward]

A proven track record of what? She was at Google when Google did extraordinarily well. Correlation doesn't equal causation. Using your criteria, until 2000 Steve Ballmer also had a "proven track record in industry".

If she had taken 3 companies to the height Google went to (or even half of that) she would have a "track record". Until she's done that all she had was wither the good sense or the dumb luck to join Google when she did.

Re:Confusing luck with talent

[hdas]

Congratulations, you discovered an important machine learning meta-algorithm: http://en.wikipedia.org/wiki/Weighted_Majority_Algorithm.

Re:Confusing luck with talent

[jeffmflanagan]

I agree with you, but isn't it the shareholder's fault if they're holding stock in a company that doesn't care about them? If they're not happy about Yahoo's lack of focus or a plan, they should sell before the stock crashes.

Duh...

[Anonymous Coward]

They've existed by cashing out their own property ever since she came on board. It's corporate cannibalism designed to make her look great at the expense of the company and its employees.... yet she is lauded as the second coming of Joan of Arc or something. The next few years will see her jump ship just before the company takes yet another nosedive, which will probably be attributed to her loss of leadership. It's fucking disgusting to anyone who is paying attention.

Re:Duh...

[cmorriss]

Not that I think Mayer is any good as a CEO, but this entire article is based on the premise that most of their revenue in the second quarter was from selling off an investment which is false. The $1.07 billion in revenue is completely separate from the investment gain from Alibaba. Investment gains like that are never counted as revenue.

See official quarterly results for more details: http://finance.yahoo.com/news/yahoo-reports-second-quarter-2013-200500159.html

selling shares is not revenue

[alen]

there is no way this is legal to report in the USA as revenue

Re:selling shares is not revenue

[H0p313ss]

there is no way this is legal to report in the USA as revenue

> Yahoo earned $846m in cash by redeeming its shares in the group, representing a significant chunk of Yahoo's $1.07bn revenue for the quarter

It's income from investment, it should be in a different line from other forms of revenue in the quarterly statement.

Not all is lost.

[formfeed]

Slashdot apparently still has a special icon for Yahoo stories

Which can only mean one of two things:
(1) Yahoo still is very cool, hip, and totally in.
or (2) /. isn't

That is a time-honored tactic

[mveloso]

Apple used to do that all the time back in the day, before they started doing well. They used to sell shares of ARM to keep themselves afloat. In fact, there's an article about it, so I don't have to rely on my faulty memory.

http://www.cultofmac.com/97055/this-is-how-arm-saved-apple-from-going-bust-1990s/