Yahoo, Marissa Mayer and the Tough Times Telecommuting

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So word comes down that Yahoo (NASDAQ: YHOO) CEO Marissa Mayer is shooting telecommuting in the back. Mayer announced that the telecommuting culture at Yahoo wasn't working and she was putting an end to it. Get into the office or quit.

Now, get me. I work at home. I work at home by choice. I like it. But when I was punching a clock and working for someone else I went into an office. Mayer is taking some grief, a serious amount of it, not necessarily because of the policy – though it's possible to argue with it – but because it's a policy instituted by a woman. The flack she's taking is silly, and people should get over it.

Seriously, the thing Mayer is trying to do is nothing short of miraculous. She's trying to take a tech firm that had fallen on very hard times – I know people who had Yahoo in their death pools – and make it ready and able to compete with Google (NASDAQ: GOOG), Facebook (NASDAQ: FB) and Microsoft (NASDAQ: MSFT). It's not small task she's taken on. If that means telecommuting doesn't work while things get straightened out, then it does.

Let's look at the competitive environment that Mayer is confronted with, shall we?

Yahoo

Yahoo was one of the first search engines. Way back when Lycos and Magellan looked like good ideas, Yahoo was out there promoting itself and growing fit to beat the band. The problem is the firm got complacent, had some issues with senior management and got beaten out by advancing technology. The fact is that something needed to be done to turn the corporate culture around, and this is a part of it.

From the shares side of the equation, Mayer has led a pretty charmed life so far. Since this time a year ago the firm's shares have increased in value by more than one-third, and I think there's more to be found there. Still, a P/E of 6.30 is betting against continuing growth. A search engine in turnaround mode that still posts an operating margin of 11.36% for 2012 is nothing to sneer at. Some money should make it's way to Yahoo.

Google

Honestly, this company is the reason why Yahoo, Lycos and such all fell on hard times. Google reimagined the search experience and made itself a common noun. Not a small thing in an environment that's supposed to be fast-moving. The company subsequently moved into advertising, news aggregation and even social media.

The stock is famously expensive. Not Berkshire Hathaway expensive, but it's floating right under $800 per share right now. And it's not sitting there. Since last just it's grown from $560.70 to $790.13. I think most of us could live with that rate of return in seven or so months. Heck, even at that price the P/E is a not-outrageous 24.33, and EPS is a good $32.47. There's still love and value to be had at Google if you can afford it.

Microsoft

Microsoft is moving aggressively into search with the BING engine. Well and good, and God knows the company has the money and muscle to keep at it until something works. I'm a big fan of Microsoft's new Surface tablet as I see the company trying to take the tablet for offices market for itself. That's a gutsy move but Microsoft has always tried to sell itself as more mature than cool.

Unfortunately, the firm's stock isn't cool. It pays a high enough dividend, 3.36% yield, that some flatness of the shares is to be expected as value is siphoned off. Unfortunately, the trend has been down a bit over the last year. Still, the P/E is right at 15, and the company did post an operating margin of almost 30% last year. So invest in Microsoft if you think the Surface and BING are going to get some traction.

Facebook

One might not normally think of Facebook as a search engine but by God, it's decided to take a stab at it. With the new 'graph search' the company is trying to even further give users no reason to ever leave the site. Unfortunately, I don't think it's going to work. I think it's one more attempt by Facebook to invent killer new technologies that people just don't want. Then again, I've never thought much of the social media site.

What's there to be said about Facebook's shares that hasn't been? They famously tanked on the IPO and haven't fully recovered yet. I didn't recommend them then and I don't now. The smart money is on Facebook slowly withering away unless it figures out how to reverse it's stock fortunes and start turning a real profit with some muscle in it. A P/E of 1,854.43 and an EPS of 0.01 argue against it.

There's still a lot of pain out there for Mayer and Yahoo to get through. And, being a woman and mother, she's going to take more grief that she would otherwise. Still, her moves to turn around Yahoo have, so far, been strong and gutsy. I'd truly like to see her succeed. But she doesn't need the expectations that she's a woman first and a CEO second to get in her way.

Good luck!

Follow Nate on Twitter: @natewooley

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Nate Wooley has no position in any stocks mentioned. The Motley Fool recommends Facebook and Google. The Motley Fool owns shares of 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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