Tag Archives: yahoo

Yahoo Closes $7.6 Billion Deal with Alibaba Group and Marissa Mayer has Money to Spend

After more than two years of on-again, off-again negotiations, the complex $7.6 billion deal is done between Yahoo and China’s Alibaba Group.  Yahoo’s shareholders, who have painfully watched the company weaken over the last few years, are likely breathing sighs of relief right about now.

In recent months there has been a lot of buzz about what would happen when this deal finally closed.  Where would the billions of dollars in cash and stock go?

Before hiring its latest CEO, Marissa Mayer, in July, Yahoo had pledged to distribute nearly all of the proceeds from the sale to its shareholders.  But then there was talk of Mayer warning shareholders that she might not return money to them after all.  Yahoo wavered from its pledge and filed regulatory documents disclosing that Mayer was in fact considering denying shareholders of the proceeds.  Instead, the money would eventually be spent in her efforts to revive the company’s growth.  The documents stated that Mayer was examining possible acquisitions, but they did not provide specifics.

Obviously this did not make shareholders happy, but overall I think that using the money to grow the company would have been a wise idea.  Giving billions to shareholders through a stock buyback or a one-time dividend is like giving a five-year old $10,000 instead of putting it toward his college tuition.  He’ll love you at first for it, but eventually it will be forgotten and the long-term outlook will grow dimmer.

Upon the completion of the sale we have learned that Mayer will not be holding on to all of the Alibaba money.  After taxes, most of the profits from the sale ($3.65 billion) will be paid out to shareholders in the form of dividend or stock buybacks, leaving Mayer and her team with about $1.3 billion to play with.

“This yields a substantial return for investors while retaining a meaningful amount of capital within the company to invest in future growth,” Mayer said in a statement.

Now that Mayer got the cash infusion that she was looking for, the technology world is eagerly waiting to see what she is going to do next.  She’s already provided free food and offered to buy an iPhone 5 or Android for her entire staff, so now what?  Her options are numerous, but there is speculation that she may try to make a huge move like putting together a takeover offer for one of the Internet’s hot websites, such as Pinterest, Vimeo, Yelp or even Foursquare.  Mayer already tried to purchase Yelp once when she was at Google, but Yelp rejected the offer and went for an IPO.  Yahoo is not nearly mobile enough, and acquiring Yelp would give its mobile platform a tremendous boost.  Yahoo currently has a monthly audience of 700 million users that it plans to build on as it develops more effective ways to connect with people on smartphones and mobile devices.

Vimeo would also be an excellent site for Yahoo to purchase.  I consider Vimeo to be YouTube’s potentially very talented little brother.  If Yahoo aims to be a serious contender to Google (who owns YouTube), it could use its own version of a leading video sharing site.  Internet videos have become a useful method of sharing information, and they are extremely popular with people.  Internet users watch more than 500 years’ worth of YouTube videos on Facebook every day, and they share about 700 videos on Twitter each minute.  Video content is now part of the content marketing strategy of many webmasters and marketers.  Acquiring Vimeo would probably come with a price tag of around $3 billion, but it could greatly increase the amount of traffic to Yahoo, boost the company’s search and social, and bring in lots of brand advertising money.

If Mayer does not wish to spend most of Yahoo’s money in one place, a smaller, less costly acquisition would be Foursquare.  Reports surfaced back in 2010 that Yahoo was considering purchasing the mobile check-in service for around $100 million.  That deal didn’t work out, and Foursquare’s last funding round valued the company at $600 million, meaning that Yahoo would have to pay at least $500 million to $1 billion for the company.  Foursquare is currently one of the hottest names in location-based services, and it could give a big boost to Yahoo in social, mobile and local.  Mayer was in charge of local at Google, and it wouldn’t surprise me if Foursquare was her top acquisition candidate. 

In order to succeed, Mayer must use the money from the Alibaba sale to take one of the Internet’s most recognizable brands and make it more profitable.  She must apply her extensive knowledge of working on the user experience, doing for Yahoo what she did for Google.  By recapturing the audience’s attention and driving more traffic to Yahoo’s website, this will in turn help Yahoo sell more online advertising space and revive revenue growth. I am personally rooting for Mayer’s success because I am eager to see epic new products that will give Yahoo the reinvention that it needs and make the Internet a better place for all of us.

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What Has Marissa Mayer Been Up To At Yahoo?

Marissa Mayer was well-known during her time at Google for being obsessively dedicated to products like search and Gmail.  Now in her fourth week as the CEO of Yahoo, it’s not surprising that she has been quick to push the company to focus more on its products and users.

While Mayer has not unveiled a detailed strategic plan for Yahoo’s future, her actions at the company so far show that her approach differs from the more business-focused CEO’s like Scott Thompson and Ross Levinsohn.  Mayer is more interested in building great products than focusing on revenue.  She made this clear to her employees when she removed Yahoo’s stock ticker from its internal company website in an attempt to keep them from getting distracted by share fluctuations.

“I want you thinking about users,” Mayer has repeatedly been saying to Yahoo workers, according to people who have interacted with her.

This is not the first time we’ve heard that Mayer is looking to improve Yahoo’s core products. Last month, one source told All Things Digital’s Kara Swisher that under Mayer, Yahoo is “becoming a technology company again,” adding that her focus is on “platforms and products.”

The top Yahoo products that Mayer seems to be targeting are search and e-mail, according to the Wall Street Journal.  She has reportedly been meeting with Yahoo’s product leaders to determine why the company is losing market share in search and to figure out how to revamp it.  The company’s search sites hold a market share of 13.4%, as compared to Microsoft search sites that have 15.4% and Google Search sites, which hold 66.7%.

These products are so important because without them, users have no real reason to visit Yahoo.  Mayer has also told employees that she wants to develop or acquire Web services to take advantage of new technology platforms like social media, mobile devices and location services.

Last week Yahoo announced plans to sell its stake in Chinese Internet company Alibaba for $7 billion.  Mayer warned shareholders that she might not return to them the $7 billion, and my guess is that the money will be used strategically to grow the business.  If Mayer does keep the money, I bet she will spend a good amount of it on purchasing some startups with smart people and monetizable products built for social media and mobile.  I am personally rooting for Mayer’s success because I am eager to see epic new products that will give Yahoo the reinvention that it needs and make the Internet a better place for all of us.

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Marissa Mayer Leaves Google to Become Yahoo’s New CEO

By now I’m guessing that we have all heard the biggest news story out of Silicon Valley- Marissa Mayer has been hired as the new CEO at Yahoo.  The second-biggest news story seems to be the fact that she is six months pregnant.  Good for her, but what I’m really interested in is who she is, what she accomplished at Google and what we can expect from her at Yahoo.  Surely she has her work cut out for her, so what changes can we expect from the company in the upcoming future?

Mayer received her B.S. in Symbolic Systems and her M.S. in Computer Science from Stanford University, specializing in artificial intelligence for both degrees.  She joined the Google team in 1999 as its 20th employee and its first female engineer.  During her time there she held five different roles, beginning as a software engineer and finishing as the Vice President of local, maps and location services.  She is credited with maintaining the company’s home page for a decade and overseeing some of their most popular products including Gmail, Google News and image, book and product search.

She made her Yahoo debut Tuesday, replacing Ross Levinsohn, who ran the company on an interim basis since Scott Thompson’s resignation in May.  She is the company’s fourth chief executive in less than a year.

David Filo, co-founder of Yahoo, said in a prepared statement: “Marissa is a well-known, visionary leader in user experience and product design and one of Silicon Valley’s most exciting strategists in technology development. I look forward to working with her to enhance Yahoo’s product offerings for our over 700 million unique monthly visitors.”

By accepting the position at Yahoo, she accepted the huge challenges that come with it.  Mayer is joining the company as its fortunes have pretty much come to a halt.  Its financial performance and stock price have been steadily declining since Yahoo rejected a $47.5-billion takeover offer from Microsoft in 2008. The company’s lower profit makes it clear that Yahoo is losing the battle for people’s time and attention and marketers’ advertising dollars to rivals Facebook and Google.  Both companies have been thriving as advertisers spent more money on Internet advertising.  It currently takes Google a little more than a month to make as much money as Yahoo does in a year.

To succeed, Mayer will have to take one of the Internet’s most recognizable brands and make it more profitable.  She must apply her extensive knowledge of working on the user experience, doing for Yahoo what she did for Google.  By recapturing the audience’s attention and driving more traffic to Yahoo’s website, this will in turn help Yahoo sell more online advertising space and revive revenue growth.

She could work with Levinsohn to build on what he had envisioned- revamping the site and making it the hottest spot on the Internet by using a combination of exclusive content and material produced by a wide range of other media outlets.  He was particularly focused on improving the quality of Yahoo’s video offerings, estimating that if the company’s website was serving up professionally produced news and entertainment clips, it will attract people and they will stick around.

Mayer has yet to announce the fate of Levinsohn, declining to discuss her plans for him in a Monday interview.

Whether Levinsohn stays or leaves, Mayer will have to develop a road map for Yahoo and decide where the company fits in the Internet and mobile market that is mainly being controlled by Google, Apple, Facebook and Amazon.  Yahoo currently has a monthly audience of 700 million users that it plans to build on as it develops more effective ways to connect with people on smartphones and mobile devices.

As one of Google’s former top executives, it is safe to say that she knows the company’s strengths, weaknesses and vulnerabilities very well.  Her experience at Google has probably also given her some insight on the areas where Facebook, Apple and Amazon.com are vulnerable as well.  Mayer has already stated that she is confident that she can make Yahoo’s services “even more innovative and inspiring in the future.”

Yahoo needs a sharp leader who can build excitement and ultimately traffic and revenue.  It looks like after a string of short-lived CEOs they may have finally found a good match. The next few months will be an interesting test to see how Mayer handles the huge challenge that she is facing.  I believe in Mayer and wish her the best of luck.

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