Mayer Appointment Outshines Yahoo Q2 Earnings
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I guess many will agree with me when, “I say sure hope Marissa Mayer has been fully vetted.” While I awoke to think that the business news the other day would be Q2 earnings numbers, I ended it with the news that Yahoo! (NASDAQ: YHOO) may have made a major step toward putting a CEO in place that knows the feel of the cyber space business, and can help it get its financial house in order.
The former Google (NASDAQ: GOOG) exec begins work first thing in the morning. To the rage of some investors, I say the stock is still not a buy at this point. For one thing, Yahoo!’s CEO position has been held by too many people over the past years. It’s almost to be expected that the exit of people who hold the position at Yahoo! will inevitably be gone in a few years. Or like this year, a mere few months!
Yahoo! was being run for the past few months by interim CEO Ross Levinsohn after it was found that Scott Thompson, who began work at the beginning of the year, had misstated his college records. I remember hearing at some point after Thompson’s departure that the information about the former CEO’s college records was found easily by doing a Google search.
The fact that Yahoo!’s board missed this before it became so widely spread and known through media reports indicates the extent of its issues. Due diligence and a strong management team are two of the things I look for in determining a successful investment.
The troubled Internet giant has made a critical choice in appointing Mayer as CEO, but the black eye it suffered earlier this year in not properly finding out about Thompson’s background pointed an important flashlight on the company’s management.
Its suffering comes partly from having to compete with Facebook (NASDAQ: FB) and Google. One of the main things all three have in common when it comes to their competition revolves around display ads. Over the years, Facebook has steadily carved out more of this crucial revenue generator. In fact, the social networking site surpassed Yahoo! for market share back in 2009, and is now number one, according to ComScore. Google is now second and then Yahoo!.
Many challenges face Yahoo!, in addition to successfully ramping up its display ad business. So it’s helpful that it has started new products, such as partnering with ABC News to deliver news and even television shows.
As an investor, buying Google on the dip may be an option, or even buying call options for Yahoo! if you think the stock will rise in price over the next few months could be considered. Since 2008, Yahoo!’s stock has been stubbornly stuck; not trading above $20. Google was trading around $575 at the closing bell yesterday, which was about a .30% drop.
I couldn’t imagine leaving a position at Google to take over a company like Yahoo! The small fish, big pond mentality is not in play here at all. Mayer has the fresh eye to be truly impactful at Yahoo! We’ll be watching to see if she can implement meaningful changes before getting booted or simply fed up. Perhaps she’s headed to being a big fish herself.
TwillyD has no positions in the stocks mentioned above. The Motley Fool owns shares of Facebook and Google. Motley Fool newsletter services recommend Google 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.