It's Not Business, It's Personal

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

Yahoo! (NASDAQ: YHOO) CEO Marissa Mayer is turning the cliche,"It's not personal, it's business," on its head. With Mayer it's very personal as she makes Yahoo a more personal place to work and to use. Mayer is teaching the Silicon Valley big boys that people count.

Put aside her physical similarity to Kathleen Kennedy in "You've Got Mail." Just remember the Kathleen Kennedy (played by Meg Ryan) quote,"People are always saying it's not personal, it's business... And what's so wrong about being personal, anyway? Whatever else anything is, it ought to begin by being personal." As they state on their Yahoo Yodel Anecdotal web page," By creating highly personalized experiences for our users, we keep people connected to what matters most to them, across devices and around the world."

It's Personnel

Just last week, Pay Pal co-founder, ex-Googler, and Yelp! chairman Max Levchin agreed to join the board. In a Wall Street Journal interview he said that Mayer had made Yahoo! a place that was now attracting talent and defectors who would like to return.

Mayer has already stated she plans to hire more engineers with mobile expertise and has hired some executive talent away from her former employer, Google (NASDAQ: GOOG) with Henrique De Castro, an executive VP, becoming operating chief at Yahoo!. Yahoo! has also hired Aaron Task to spearhead Yahoo Finance into a more original content site.

Forbes commentator Eric Jackson has been very bullish on Yahoo! since Mayer came on board on July 11 saying Mayer has already fixed what the finance media had characterized as a "toxic culture" and that the defection of talent has abated. He has also characterized her as a "beloved" leader there.

It's Personal

Making Yahoo! a better company will draw people who want to work for a winner. By making the content, search and email more personal it will become a winner. Fellow Fool Tamara Rutter is impressed with Yahoo!'s new "user-focused approach." Mayer has stated she wants to be competitive with Google and Facebook (NASDAQ: FB) by 2015.

To that end, Mayer is in talks with a British 17 year old wunderkind, Nick D'Aloisio, who created Seemly, a news brief app that condenses headlines to the brevity of a tweet. This would be only one of several mobile startups that the company has bought in the last year, including On The Air, a mobile talk show app and Stamped, a Yelp! like app.

While competitors, Google and Microsoft (NASDAQ: MSFT) duke it out over "Scroogling"-the controversial practice of businesses paying to be listed on Google Shopping, Yahoo has redesigned its email service and engineered it to be faster and seamless across mobile and other devices. This comes on the heels of a revamped flickr, their photo sharing service, challenging Facebook's Instagram.

Its Business

According to eMarketer mobile advertising should reach $12 billion by 2016 and Mayer is expecting to capture a good portion of that for Yahoo!. Making digital media and search more personalized and bringing on talent seems to be Mayer's personal and personnel approach.

Yahoo! is the number one digital media provider and claims 700 million users per month. Even at a 52 week high its P/E at 6.05 is stunningly low for a tech stock, lower than any of its internet competitors. The debt to equity ratio is only .25 and return on equity is 28.30% with a 79.94% profit margin. 

Since Mayer started the free cash flow growth rate has increased from 75% to 193%. And since Q3 2011 net income now stands at over $3 billion, a tenfold increase. The company also surprised on its Q3 results by $0.11 on non-GAAP earnings per share.

As mentioned earlier Yahoo! is also moving into originating content and just inked a deal with NBC Sports, just one of several with major TV networks to create cross-platform content, making Yahoo! Sports even stronger. Another tailwind for Yahoo! is the now more likely IPO of Alibaba of which Yahoo! still owns a 24% stake.

Is The Mayer Miracle Baked In

Frankly, I don't know how she does it with a brand new baby boy and a company that five previous CEO's in as many years haven't been able to turn around. Makes me tired just thinking about it. Can Mayer keep up this torrid pace? Should you buy Yahoo! here at 52-weeks highs and up 34.34% over the last year?

Analysts and some hedge funds had previously predicted a $19 price target for Yahoo! before Mayer came on board. The growth rate for the next five years is expected to decelerate from this year's 37.80% to 11.12%, below the industry's expected 16% growth rate for the next five years.

Certainly, Yahoo! is remaking itself under Mayer's leadership and she's making it a personal priority but in  proper proportion, as she says, "God, family and Yahoo!-in that order." She's been making good on her promises and it may take time, but considering what's been accomplished so far you may want some personal-ity for your portfolio.

leglamp has no positions in the stocks mentioned above. The Motley Fool owns shares of Facebook, Google, and Microsoft and has the following options: long JAN 2014 $20.00 calls on Facebook. Motley Fool newsletter services recommend Facebook, Google, and Microsoft. 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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