A Yahoo Search finds a New CEO...from Google

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The future is looking a little brighter for Sunnyvale, California's Yahoo! Inc. (NASDAQ: YHOO)

Yahoo has just hired former Google (NASDAQ: GOOG) executive Marissa Mayer to be their next chief executive officer (CEO).  By hiring Google’s Mayer, Yahoo! ironically turns to the company that has played a central role in its own decline.  Mayer has helped Google to become the internet powerhouse that it is today by managing and tailoring products to fit consumer's demands, but has little experience in running a company or netting big advertisers.  Mayer is hoping to reinvigorate a beleaguered Yahoo!, which has been struggling in the wake of the rise of social networking, mobile entertainment, and the online advertising market.  The tech company has been struggling in recent years to establish an identity.

Mayer has also spent a short time serving on the board of Wal-Mart (NYSE: WMT) .  It's not difficult to see why Wal-Mart wanted Mayer on the board, as Wal-Mart Chairman Rob Walton emphasized her tech expertise, said:  “We are on the cusp of a massive transformation in the way people shop in our increasingly connected world. Marissa’s insights and expertise in the technology and consumer areas are valuable assets to Wal-Mart as we move forward.” (Forbes, 2012)

Google, Microsoft (NASDAQ: MSFT), and Facebook (NASDAQ: FB) have largely overtaken Yahoo! in several key sectors of the internet economy.  Yahoo!, which used to be the largest seller of display ads in the United States, has lost its top spot to Google and Facebook this last year. Yahoo's search business has taken a hard hit, as the company turned over its search business to Microsoft and now holds 6.7 percent of the $15.36 billion search ad market.  The ever-dominant Google continues to rake in the revenue with 75.9 percent of all search ad revenues.

Yahoo held 15.7 percent market share of the online advertising market in 2009, but has since dropped to 9.5 percent.  Projections estimate that its share will fall further to 7.4 percent this year, even though online advertising spending in the United States is expected to grow 23.3 percent, to $39.5 billion.

The company has yet to venture in to mobile advertising.  Should Yahoo! jump feet-first into producing mobile products under Mayer, Yahoo will once again face a market dominated by Google.  Google held 51.7 percent of the $1.45 billion in total mobile advertising spending in the United States last year.

In order to engineer a Yahoo! turnaround, Mayer will have to act swiftly and decisively to cut irrelevant programs which bleed dollars, as well as reigniting the support that the web-based company has in its users.  Mayer's experience at Google proves that she is ready for the challenge.  During her tenure at Google, Mayer certainly is an asset to the company, but only time will tell if Yahoo's new era will lift the storm clouds over Sunnyvale.


EvanBuck has no positions in the stocks mentioned above. The Motley Fool owns shares of Facebook, Google, and Microsoft. Motley Fool newsletter services recommend Google, Microsoft, and Yahoo!. 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.If you have questions about this post or the Fool’s blog network, click here for information.

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