First Take: Mayer's touch mostly golden at Yahoo
Marissa Mayer, chief executive officer of Yahoo.(Photo: Laurent Gillieron, AP)
SAN FRANCISCO — Marissa Mayer has shown a deft, golden touch in the nine months she's been Yahoo CEO — except for bad PR that followed her clumsy telecommuting diktat.
Today, she burnished her company résumé with a rollicking financial quarter that underscores progress from Mayer's investments in Internet search, e-mail and other key areas of potential expansion.
The numbers — profits jumped to $390.9 million, or 36%, in its first fiscal quarter, and revenue was $1.07 billion — are the company's first full quarter of results since Mayer began to implement her plan to improve revenue growth, operating income and cash flow.
"Marissa has turned around the search business," says Leigh Drogen, CEO of researcher Estimize. "A key, going forward, is mobile ad revenue."
Mayer, 37, has righted Yahoo's wayward course — four long years without sales growth — by pumping money into four product areas: search advertising, display ads, video and the company's mobile platform.
Early fruits of Yahoo's labor: Fourth-quarter search revenue was the highest since 2010, when Yahoo began sharing its search ad revenue with Microsoft in exchange for using that company's search technology. The surge even prompted eMarketer to raise its forecast for Yahoo's stateside sales for the first time in a year: up 3%, to $3.28 billion.
That's the good news.
The bad: Despite that projected ad revenue growth in 2013, eMarketer still expects Google and Microsoft to knock Yahoo around in this venue, with search ad revenue growth dropping to 6.2% from 6.5% last year.
And though Mayer — like the rest of the tech, media and fill-in-the-blank world — is betting big on mobile, Yahoo will face bruising challenges here as well, with behemoths Facebook, Apple and, yes, Google and Microsoft challenging every move.
The key test for Mayer in the foreseeable future will be whether these bold gambles and aggressive investments will produce a meaningful challenge to Yahoo's competitors while maintaining a revenue stream worth cheering.
But for this quarter, at least, Mayer is still playing with house money.