Yahoo! Inc. (NASDAQ:YHOO) finally found the right CEO for the job. Marissa Mayer, in just six months, has achieved more success than the previous 5 chief executives combined. She’s made acquisitions; she’s boosted morale, and, more importantly, her company reports increasing revenue for the first time in over four years, crushing Wall Street predictions by 30 percent.
The numbers, when released, pushed Yahoo’s stock to a four-year high, capping off a 28% increase in the stock since the Mayer arrived. The CEO notes that a renewed focus towards “people and products” can take credit for the bump. “We are off to a very good start,” she said. “We are making the world’s habits more inspiring and entertaining.
How did she do it?
First, she claims she focused on the people at Yahoo! Inc. (NASDAQ:YHOO). Accustomed to layoffs and cost cuts, Mayer boosted morale by offered things like free cafeteria food and complimentary iPhones and Android devices. In addition, she hired PayPal co-founder Max Levchin to the Yahoo board for an added perspective.
Next, she shifted her focus to services. She completely revamped Yahoo’s email client, changing the way people thought about Yahoo mail. Finally, she redesigned the company’s social photograph sharing site, Flickr, increasing photo uploads by 25%, improvements that Mayer calls just “a hint” of what’s to come.
Yahoo! Inc. (NASDAQ:YHOO) reported fourth quarter profits of $272.3 million, meaning 23 cents per share, which, although down 9% from the same period last year, should be considered as great numbers for a company which struggled in the first half of 2012.
While online search revenue is up, display ad revenue is down, sinking 3% since last quarter. Believe it or not, Yahoo was once the biggest display ad seller in the U.S., holding a 15.5% market share. However, that number declined to a measly 8.4% last year. “More personalized content and increased product innovation will be key to getting us back to the path for display revenue growth,” Mayer said regarding the slump.
In the same period, competitor Google Inc (NASDAQ:GOOG) increased their market share in the field to 41%, or nearly 5 times the share that Yahoo has.
While Mayer’s results are impressive, her job certainly isn’t done yet. Analysts warn investors, telling them to be wary that the remaining work for Mayer “is not easy,” according to BGC Partners analyst Colin Gillis, who notes that Ms. Mayer still has lots to do to position the company for future growth.
The CEO has acknowledged that one of the keys to sustaining that growth will be the company’s mobile strategy: something that is easier for companies like Google who can use their hardware, like tablets and phones, to force their software upon consumers. Google has about 20% more unique users each month than Yahoo does; something that is greatly helped by their tablet and phone products.
Furthermore, companies like Google continue to outspend Yahoo in areas like research and development. Mayer’s company also has a hard time convincing some of the tech industry’s finest to join them over their competitors.
Part of Google’s immense search success on phones and tablets is through mobile search. However, Yahoo is looking to get a piece of the pie, acquiring three different startups focusing on mobile revenues: Snip.it, OnTheAir, and Stamped. The acquisitions, according to Mayer, are moreso for the engineering talent than the products offered.
It appears to be a long road ahead for Yahoo! Inc. (NASDAQ:YHOO), who, despite some impressive numbers, still has lots to prove. Watch for the release of their numbers in the coming months to continue to track Mayer’s work: the numbers are certainly getting better, but they aren’t good enough for me yet.
The article Mayer’s Presence Heavier Than Ever at Yahoo originally appeared on Fool.com and is written by Michael Nolan.
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