Marissa Mayer’s Yahoo: A tech company or a media company?

A few months ago Google’s top female executive, Marissa Mayer, jumped ship to take the helm at Yahoo!. Back then people speculated about what the hire meant for the company and what its focus would be. As it turns out, we are all about to find out: later today, the company will be reporting its first quarterly earnings since Mayer took over.

This report could reveal some very significant changes in the company’s focus and Reuters is already reporting that these changes will position Yahoo! as a technology company rather than a media company. According to the report, the new CEO has spent “her first months as Yahoo Inc CEO quietly moving the internet pioneer back to its roots in technology”.

When Mayer took the corner office at the ailing internet giant’s Sunnyvale headquarters she said she wanted to take the company back to its glory days, when “people didn’t understand the difference between Yahoo! and the internet.”

Since joining Yahoo the audacious CEO has recruited former Googler, Henrique De Castro, who Yahoo has been chasing for some time.

“Her hires, acquisition musings, and other early moves hint at an ambitious, technology-driven comeback plan designed to revitalize ageing but well-trafficked properties such as Yahoo Mail, Yahoo Finance and Yahoo Sports,” says the Reuters report.

This new direction is in opposition to that of her predecessors who have been aggressively focusing on media content deals by inking deals with ABC News, CNBC, and DailyMotion to share content or to bring an original program starring actor Tom Hanks to its website. Mayer may very well change all of that.

Yahoo as a company needs to bring users back, it needs products that users can’t live without and services that will allow people to engage with its sites and content. It seems Mayer is slowly carving out what all that means. She has reportedly been meeting with Silicon Valley heavyweights such as AOL Inc CEO Tim Armstrong, another ex-Googler; Silicon Valley lawyer Larry Sonsini; and Wall Street investment bankers. Mayer has also been meeting with promising startups in the valley for possible acquisitions including restaurant reservation site, OpenTable Inc and advertising technology companies PubMatic, Turn and Millennial Media.

A few weeks ago the company sold off a portion of its stake in Chinese internet powerhouse Alibaba. The deal netted the company US$4.3-billion so it’s not short of cash for new acquisitions. It also has the money to hunt for new engineering talent or strengthen its core services. Reportedly there are two types of deals are under consideration: companies that will increase user engagement, including on mobile, and those that will boost advertising returns, a source said to Reuters.

Mayer’s strategy isn’t challenge-free, as Reuters points out:

“The new strategy is not without risks: it positions Yahoo squarely against Facebook Inc and Google. It also risks alienating a large, media-focused contingent that is already weakened by the departure of Ross Levinsohn, who had championed a media-centric approach when he was interim CEO before Mayer’s arrival in July.”

Currently about 700-million people visit a Yahoo site every month, so it’s still ranked quite high on a global scale, however its mobile offerings are not as impressive.

“The largest change is to be deadly serious about mobile,” a former Yahoo manager tells the news agency.

“Yahoo faces tough competition from Facebook and Google, two companies that have taken consumers’ time, engineering talent and market value from Yahoo. They are also trying to make the transition to mobile, but it has been difficult,” the report continues.

Mayer faces a few challenges as CEO and will be expected to deliver considering the size of her paycheck. She must work on improving on products that users love and would like to see restored to their former glory (such as Flickr) and introducing new products and services that position the company as a technology powerhouse at the forefront of innovation.

Everything hangs on today’s quarterly earnings report.



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