Do You Believe In This Internet Giant?

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

Although I love writing about her, Meg Whitman isn’t the only female CEO trying to overhaul a struggling company. Marissa Mayer, one of the most powerful women in the world, is working to completely change Yahoo! (NASDAQ: YHOO) from the ground, up. At a conference recently, Mayer made promises—and she rarely does so without keeping them.

This time, she pledged a revamp of Yahoo!’s mail component: a straggler in the email market. Even though it began 10 years before Gmail did, Yahoo still has 75 million fewer users than its counterpart, trailing 425 million to 350 million.

So, Mayer went out to send a message: she pledged a more tech-savvy interface, as well as mail clients that were visually nearly identical across all of the means to access Yahoo! mail. Now, the beautiful interface is much more visually pleasing, and can be found on the computer, tablet, App Store, and Google Play.

One of the main problems that Yahoo! set out to fix was its distracting setup. One of the critical keys to Gmail’s success was its simplicity and its lack of glaring ads. With Yahoo!, it became such a distraction that it was almost tough to find mail through countless videos and advertisements. Now, the aesthetically pleasing newer model features none of the excess advertisements.

The reason Google (NASDAQ: GOOG) did this—and Yahoo! is now figuring it out—is because these just slow the email service down. Most importantly, they aren’t even necessary: the true value in your email account being a Gmail account for Google is the analytics behind: the information that Google gets when you register a Google mail address. Ad revenue is a very small piece of the pie. It isn’t small enough to disappear, however, as Google still runs a very small advertising bar across the top of email pages.

So, what does all of this news mean for you and your portfolio? Well, it comes at an important time for Yahoo!: a time when the competitors are kicking it up a notch. Facebook (NASDAQ: FB) is constantly working to expand ad revenue, and it is even looking to add onto its messaging service. They have also been involved in talks to purchase Microsoft’s Atlas Service. AOL (NYSE: AOL) has just launched a new and experimental email client called Alto. Alto organizes emails into “stacks” that allow you to categorize things like social media emails or daily deals, and have them sorted straight to a stack instead of cluttering your inbox. Alto, some speculate, could replace AOL mail at any point. AOL is constantly trying to become a content-rich site, as evident in their development of the On Network video service, in hopes to generate revenue.

As Yahoo! looks to approach its 52-week high, the contest between the email client giants has just begun. Fortunately, we can sit back and watch as they duel it out to become the king of the email platform. The most important part of this revamp for Yahoo!, however, is that it marks a beginning of their improvement: the struggling company is finally starting to deliver behind their new and improved CEO, something they drastically needed. Stay tuned to see if Yahoo!’s changed email platform is the first of many changes that put them on my list of stocks to invest in. For now, however, in their liminal state between struggle and profitability, I would stay away. But that is just for the time being.


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