Yahoo, CEO Mayer Face Board Scrutiny This Week

By Chris Preimesberger  |  Posted 2015-12-01 Print this article Print

Three-day board of directors meeting may change the course of the venerable Web services and media company.

Yahoo reportedly will be facing a few crucial days of reckoning Wednesday, Thursday and Friday of this week when its board of directors meets on the company's Sunnyvale, Calif., campus.

Three years and four months into CEO Marissa Meyer's attempted turnaround of the pioneering Web services and Internet advertising giant, prospects for revenue improvement haven't been satisfactory to stockholders as well as a reconstituted board that placed its hope in her when she took over in July 2012.

Even though the company is profitable, revenue has been sliding for several years, and even with layoffs, project cancellations and other cost-cutting moves, the downward trend is continuing.

Profitable, But Margins Thinning

In the company's most recent quarterly earnings report, Yahoo -- which is still the world's most commonly used home page -- showed a profit of $76.3 million for the third fiscal quarter ended Sept. 30. Black ink is never bad, but on overall revenue of a $1 billion, the margins are thin and getting thinner.

The Wall Street Journal reported late on Dec. 1 that its sources said that the board was expected to have some difficult topics on its meeting agendas, including a discussion around whether to spin off a major investment of more than $30 billion in shares of Alibaba Holding Group, or even more surprising, to find a buyer for its core business of Web properties.

Those core assets include such central divisions as Yahoo Mail, the Tumblr blog franchise (which Yahoo bought for $1.1 billion in 2013 but hasn't shown a profit), its’ news and sports sites -- which employ high-salaried, high-visibility people such as Katie Couric and others -- and several other departments. Each or all of them could attract buyers from private equity firms or media and telecom companies who could add the assets into their own set of services.

It's possible the board may discuss and/or enact both of those items. Yahoo declined to comment on the Journal report.

Never Was Able to Win the Search War

Yahoo's original central problem was that its Web search technology was surpassed in speed and overall quality by Google 15 years ago and it's never been able to catch up -- despite a recent partnership with Microsoft to use its Bing search IP. Even though it predated Google by five years and Facebook by 10, Yahoo nonetheless has struggled for years to improve its advertising businesses in competition with the two other Web giants.

Mayer came to Yahoo after a 13-year tenure at Google, where she played leadership roles in the development of Google Earth, Gmail and Google News, and is credited with helping create the company's celebrated search page.

Mayer's main project in her turnaround strategy was to push mobile, video, native and social media ads -- an initiative called Mavens introduced in 2014 -- but it hasn't been able to turn around the company's revenue erosion. Yahoo, once all-powerful on the desktop, has suffered as desktop search and news ad sales overall are declining.


Chris Preimesberger

Chris Preimesberger is Editor of Features & Analysis at eWEEK. Twitter: @editingwhiz
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