NEWS ANALYSIS: Yahoo CEO says she wants three more years to straighten out Yahoo. Nothing's impossible, but this is close to it.
Silicon Valley's favorite female CEO, Marissa Mayer, told Charlie Rose on his Bloomberg News talk show the other day that she has a three-year strategic plan for continuing in her attempt to turn around Yahoo.
Basically, she wants to do this by transforming Yahoo into a go-to site on mobile devices, which is not exactly its top stock in trade right now.
We wish her luck in her endeavor. Yahoo is a company whose revenue has been shrinking for more than 12 years, hasn't shook up the world--Internet or otherwise--with any new products, and has been forced to trim projects and jobs on and off since 2008.
On the other hand, Yahoo maintains millions of loyal fans for its news, sports and finance editorial content. But it needs a huge shot in the arm beyond editorial content, and investors and directors of the board are beyond being patient. Mayer, as the quarterback, needs to throw a few touchdown passes soon. That means this year.
Because of reduced expectations, the Sunnyvale, Calif.-based company ostensibly is being forced by activist investors who don't believe in the competitiveness of Yahoo anymore to sell off its main businesses (search and editorial) and keep the corporate identity of Yahoo as a shell to manage the rest of its assets—which consist mostly of a $30 billion part of Chinese retail giant Alibaba.
There remains a lot of conflict at the board and shareholder levels, because Mayer is still talking about a rebirth of sorts to analysts and journalists like Rose—although this may well be a tactic to try to fetch a higher price for the core business from possible buyers.
We have three reactions to her plan:
a) It will likely take longer than three years to turn Yahoo around, because the company's been in the doldrums for more than a decade;
b) Yahoo's way behind its competition when it comes to mobile content, and
c) Mayer's already in her fourth year of her first turnaround attempt at Yahoo, and the company's not even in the left-turn lane yet to make that U-turn.
Stock-wise, Mayer has piloted the company to success. Yahoo was selling for $14.92 in August 2012 when she came over from Google as the company's eighth CEO. The stock price was $34.28 on March 17. So no argument there.
The company is still in the black, but this is largely due to her cutting costs all over the place. Last month, Mayer announced that she's cutting 15 percent of the entire workforce this year
Those activist investors are getting antsy. A few of them are preparing an auction process to sell off some assets, and it looks increasingly likely Yahoo will not be a standalone, publicly-traded company by this time next year.
It really doesn't look likely that Mayer can pull off a Hail Mary score in the final quarter of this game. Yahoo is a big company that can't make that U-turn without a miracle, and miracles are few and far between. Not impossible, but certainly not likely.
This isn't Mayer's fault, either. Yahoo's long journey to losing this game started way back in 2000, when it lost the search business to upstart Google.
The Internet world hasn't been the same since. Google has gone into the stratosphere, and Yahoo ... well, it still needs the U-turn.