Yahoo’s CEO Promises Smartphone-Friendly Websites

on Oct 23, 2012

On 22 October 2012, the Financial Times reported that Yahoo’s CEO Marissa Mayer highlighted mobile apps and services as the priority of her turnaround strategy for Yahoo (NASDAQ:YHOO), which in recent years has been lagging behind more innovative rivals such as Google (NASDAQ:GOOG) and Facebook (NASDAQ:FB).

**Mobile Services Core of Yahoo’s Turnaround Strategy**
Ms Mayer, a long-serving Google executive who took charge at Yahoo in July, told analysts that the “daily habits” of Yahoo visitors to check sports scores, stock prices and weather, to send e-mail and share photos, left the company well placed to ride the “fundamental and massive platform shift” of users away from personal computers and toward mobile devices such as tablets and smartphones.

“Our top priority is focused, coherent mobile strategy,” said Ms Mayer, as quoted by the FT. “We’re determined to go back to our roots as a consumer internet company focused on user experiences.” As reported by Reuters, Ms Mayer noted that Yahoo would look to improve its performance and find opportunities in its existing businesses such as search, rather than expand into completely different businesses.

!m[Company Shares Up Following Reported Earnings Growth ](/uploads/story/624/thumbs/pic1_inline.png)Yet, her main priority remains the shift to mobile devices, which Yahoo’s faster-growing competitors Google and Facebook have been struggling with. “The mobile wave is a huge wave for us to ride,” said Ms Mayer in a conference call, as quoted by Reuters. She also added that Yahoo so far had failed to take advantage of the shift to smartphones. “While we’ve made progress, Yahoo hasn’t capitalised on the mobile opportunity,” Ms Mayer sad, as quoted by the FT. “We’ve underinvested in our mobile front-end development and we’ve splintered our brand. All of this needs to change.”

**Growth in Net Revenue**
The outline of Ms Mayer’s strategic vision coincided with Yahoo’s earnings results for the third quarter, which beat analysts’ expectations. The New York Times reports that Yahoo said it earned $177 million (£110.6 million) in income from operations and adjusted net earnings of 35 cents per share (EPS), whereas analysts polled by Thomson Reuters were looking for adjusted EPS of 25 cents. The reported income excludes the $2.8 billion gain related to the sale of half of Yahoo’s stake in the Chinese ecommerce group Alibaba (HKG:1688). Net revenue, excluding fees paid to partner websites, was $1.09 billion compared with $1.07 billion revenue in the same period in 2011. Yahoo, however, ended the quarter with 12,000 employees, down by more than 12 percent from 13,700 employees a year earlier.

The FT reports that the earnings statement also revealed that Yahoo had agreed a new undrawn credit facility of $750 million, which the company said would be used for “general corporate purposes”. Ken Goldman, Yahoo’s recently appointed CFO, noted that the company would spend its resources “prudently” and with “discipline”, and would remain “very mindful of shareholder value creation”.
**Yahoo’s Shares Up**
As a result of the positive quarterly earnings news, Yahoo’s shares rose by more than four percent, reaching $16.49 in afterhours trading on October 22. Bloomberg reports that the company shares have dropped 2.2 percent in 2012.
The earnings results and the rise in shares mark a successful first quarter for Ms Mayer who is expected to focus on revamping Yahoo’s technology and products. “The fact that the quarterly results didn’t show any massive deterioration was a decent sign, and gives her probably more time,” commented Macquarie Research analyst Ben Schachter, as quoted by Reuters.


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