Marissa Mayer has only one last job to do at Yahoo

April 20, 2016

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

Yahoo’s first quarter is the last straw. An 11 percent drop in revenue for the first three months of the year puts an exclamation point on the lack of progress in almost four years with Marissa Mayer as chief executive. Google and Facebook are cleaning up in digital advertising, especially mobile. It’s time to offload Yahoo’s core business before bidders like Verizon lose interest.

Mayer’s enthusiasm is unflagging. Even after the poor showing reported on Tuesday, which included an operating loss of $167 million, she keeps touting her ability to kick-start growth while considering other alternatives. It’s hard to see what options are left.

The $34 billion company’s so-called “mavens” are moving at an analogue pace. This Mayer-named collection of mobile, social, native and video ads represent a little more than a third of Yahoo’s top line and only grew 7 percent in the first quarter. By comparison, Facebook’s mobile-ad revenue increased 81 percent in the fourth quarter from a year earlier and accounted for nearly the entire $5.8 billion generated.

Most companies put a gloss on themselves when they’re up for sale to woo suitors. Yahoo, which has lurched from strategy to strategy, is struggling to manage even that. Mayer is making potential bidders listen to pre-recorded messages while providing little financial detail, according to media reports. It suggests there may be something messy inside or that the CEO isn’t especially keen to sell.

Despite having to press one for the pitch book, there is interest nonetheless. Telecom titan Verizon signaled it would bid in an attempt to marry Yahoo with AOL, which it acquired last year for $4 billion. Private-equity firm TPG and the digital-advertising remains of the phone-book publisher Yellow Pages also may be in the mix.

Some potential bidders already have hung up on Yahoo. Comcast, AT&T, Time and Barry Diller’s internet hodgepodge IAC are among those that media reports say considered making an offer but didn’t. Yahoo expects the second quarter will be even worse, with at least a 12 percent decline in sales from a year ago. Given that outlook, Mayer only has one last job to do at Yahoo. She may be running short on time, however, to get this one right.

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