After a rigorous search for 2 months,
) finally announced Marissa Mayer as its new chief executive
officer and member of the board of directors effective July 17,
2012. Yahoo is hopeful that Mayer will be able to turn around its
struggling Web portal with her wide experience in technology.
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The 37-year old Mayer joins Yahoo from the world's most popular
Internet search engine,
), where she was responsible for local and geographical products
including Google Maps, Google Earth, Zagat, Street View and local
search for desktop and mobile.
According to sources, Mayer's name was not mentioned in Yahoo's
shortlist of CEO candidates after Scott Thompson had to resign due
to his inflated academic credentials. Instead, it was becoming more
likely that interim CEO Ross Levinsohn would step up to the
permanent post. Hence, Mayer's becoming the Yahoo chief was a
surprise to many.
Mayer will now be Yahoo's fifth chief executive in less than a
year, including two interim CEOs.
Despite being one of the biggest brand names, Yahoo has performed
very poorly in the last few years. We believe the job will be quite
challenging as Yahoo has seen its fortunes decline in recent years
with its continued leadership crisis and failure to recognize
upcoming trends and user behaviors. The social networking sites of
) and Google have also been persistently eating into Yahoo's market
Mayer said that she would focus on the Internet Company's strong
franchises, including e-mail, finance and sports. She also expects
to do more with its video broadband and mobile businesses,
increasing its user base.
Things haven't been great at Yahoo and we are uncertain about
whether Mayer can help Yahoo regain its former stature. Due to the
continuous changes in the top most management, it has become
difficult to understand the company's core strategy. Given Mayer's
background, one might expect Yahoo to increase focus on Web
technology and products, while content takes a back seat.
To combat the crisis at Yahoo and engineer a turnaround in the
business, Mayer will have to take some bold decisions, restoring
Yahoo's position as well as shareholders' confidence. We believe
that Yahoo will be a wait-and-see story until Mayer's new
strategies bear fruit.
Yahoo shares carry a Zacks #2 Rank, implying a Buy rating for the
near term (1-3 months).