Is Mayer a Winner at Yahoo?

Dana is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

Since taking over at Yahoo! (NASDAQ: YHOO) in July, Marissa Mayer has seen the value of the shares rise almost 30%.

Is it her magnetic personality? Is it her results? Is it the plans she has put in place to change the company and what it does?

Mixed results for fourth quarter

The numbers tell a mixed story. Fourth quarter revenue fell short of analyst expectations, and profits were actually down, but the AP called it a beat, based on the $7.6 billion windfall it got on selling part of its Alibaba stake, some of which went into share buybacks.

Fact is, Mayer is still spinning, but in ways Silicion Valley likes. She's not pretending Yahoo can beat Google (NASDAQ: GOOG) in search technology, only improve its user interface.  She emphasized Yahoo's role in powering Apple Siri searches, and said the partnership with Microsoft Bing will continue. I have noticed an increased speed in accessing Yahoo pages lately, but that's just anecdote.

Anyone, however, could have gotten cash from Alibaba and splashed it on buybacks, raising the stock price artificially. Nothing has yet happened at Yahoo under Mayer that is materially beneficial to the progress of the underlying company.

Google not suffering

And Yahoo's peers are gaining in value as optimism over the economy and the stock market rise. Google is up nearly 23% since Mayer left it, buoyed by the apparent success of its Chromebook and Android, as well as growing search revenues.

Google has its eyes focused in many directions at once, and seems to be succeeding. The Android operating system now dominates the mobile space, and since the biggest OEM gains have been by Samsung, Google is gaining the benefits in search.

Google's Chromebook seems to have been an unexpected success, with Hewlett-Packard now reportedly joining the rush to deliver one. 

Google is even tweaking Facebook, now claiming its Google Plus is the second most-active social network, with its YouTube sitting at number three. Some analysts question how worthwhile that claim is, given that Google pushes all users toward Google Plus registration and claims credit for any use that goes into it. 

Jury still out

The bearish case on Yahoo is, however, that a rising tide lifts all boats. Google hasn't suffered from Mayer's departure and other tech companies are also up since she went to Yahoo. For instance, Amazon.com is up 28% despite adding almost nothing to its bottom line over Christmas – it's just optimism over growth in cloud and the Kindle. Even News Corp. is up 26%, on hopes for its break-up, and Comcast, the cable company, is up 24%.

I put some money into Yahoo several months ago, and wrote at the time it was speculation. It's way too early to call Mayer's reign at Yahoo a success. Investors today are betting Mayer can actually perform on mobile, and show dramatic improvements in use of things like mail and finance she's now promising to emphasize, over the next 6-12 months. Against serious competition.

I think she can, but I could still be wrong. 

 


DanaFBlankenhorn owns shares of Google and Yahoo!. The Motley Fool recommends Google. The Motley Fool owns shares of Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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