As recently as 36 hours ago, Yahoo-watchers would have sworn nothing would have distracted them from their intense focus on the company’s second-quarter earnings release.
But that was before yesterday’s bombshell announcement that Google’s employee No. 20, Silicon Valley wunderkind, Marisa Mayer, had jumped ship to become the latest employee at Yahoo! – in the top job, no less. Mayer is taking over the CEO’s job vacated by Scott Thompson several weeks ago, following revelations that he claimed on his CV to have a computer science degree that he didn’t in fact possess.
There’s no doubt about Mayer’s qualifications for the CEO job at Yahoo: she is one of the best-known engineers in the Valley, and has worked closely with Google’s founders to craft that search engine’s look and functions.
In many ways, she’s joining Yahoo at the best possible time. True, she’ll be the company’s sixth CEO within the last five years, counting two interim CEOs, such as current leader Ross Levinsohn. But Yahoo’s board is almost brand new (only three of its dozen members were here a year ago), and new directors include Dan Loeb, an activist hedge fund manager known for shaking things up.
Best of all, perhaps, from Mayer’s standpoint, is the fact that she is jumping on board just as the company is poised to announce what some analysts expect to be significantly better earnings. They’re beginning to raise their ratings on Yahoo’s stock, thanks to moves begun under Thompson and other former leaders, including the pending staged exit from Alibaba Group, the Chinese e-commerce company, which could raise up to $7 billion in proceeds.
Colin Gillis, an analyst at BGC Partners, upgraded his rating on Yahoo’s stock to a “buy” from a hold, putting a $20 price target on it. (Yahoo’s shares currently change hands for around $15.64 apiece.) Gillis began his report with an investment haiku: “Time to Buy Yahoo. The turnaround is turning, the pace is faster.” He wrapped it up by calculating that the company may end up earning $1.01 a share this year and $1.15 a share in 2013, when the consensus estimate calls for Yahoo to earn $1.09 a share.
But Yahoo is still taking a risk, by opting to move Mayer into the CEO’s post – and no, it’s not because she is expecting a child in early October, relatively early into her new post. Rather, it’s the fact that Mayer’s experience has been gleaned working for a company that was the challenger and then the leader, and developing new products for that company, from creating a more efficient search function to overseeing the technical deployment of the now ubiquitous Google Maps. At Yahoo, the challenge she will face is radically different: how to turn around a former market leader and help it regain its past status.
And here’s where we come to the “vision thing”. Presumably, before they awarded her the job, Yahoo’s board grilled her on what she believes she can do to not only revive the company’s financial fortunes – after all, anyone can cut costs to the bone – but to reshape and provide some impetus for a new strategic direction. The rest of us – investors, analysts, Yahoo employees, the media – will have to wait and see what that is, and how it plays out.
In the short term, one of her biggest challenges will be something almost banal: managing the expectations and the fears of the company’s surviving employees.
After multiple shifts in direction, a complete board overhaul and a revolving door leading to the corner office, Yahoo’s employees are probably feeling more than a little shell-shocked right about now. Add to that the fact that Levinsohn had a considerable number of backers within the ranks of those employees, rooting for him to be confirmed as the permanent CEO, and you’ve got potential trouble.
Between now and the anticipated arrival of her baby boy (she tweeted the news to followers shortly after the Yahoo announcement), Mayer will need to put in place the basics of whatever strategic direction she envisages for the company, moving fast enough for Yahoo to gain some momentum, but not so fast that she loses the support of her employees.
It’s a tough job, but someone’s got to do it. And it might as well be a woman who has publicly stated that she doesn’t believe that there is any such thing as burnout.
