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Mayer vows improvements across the board at Yahoo

Juan Carlos Perez | Oct. 23, 2012
Marissa Mayer, participating in her first Yahoo earnings conference call since becoming CEO, outlined a broad range of areas in which the company needs to improve.

Regarding search, Mayer said that the revenue Yahoo is getting from its partnership with Microsoft remains below expectations, but Yahoo is still benefitting from existing revenue guarantees.

"While our search share is challenged, we're working closely with Microsoft to define the future of search," she said.

Yahoo will strive to grow its search market share, which is a top priority, by taking advantage of the opportunities the deal affords it to innovate independently on its search result pages, she said.

"There's a clear upside potential here, and it's time to execute against it," she said.

Microsoft and Yahoo signed their 10-year search deal in mid-2009 and got regulatory clearance for it in early 2010. However, for a variety of reasons both technical and operational, the partnership hasn't yielded the expected results.

When the deal was struck, Yahoo and Microsoft believed it would allow them to better compete against Google, which dominates search usage and advertising, but Google has maintained its position.

At a general level, the deal puts Microsoft in charge of Web crawling, indexing and ranking, and of self-serve, pay-per-click ad sales. Yahoo, on the other hand, agreed to pay Microsoft a commission for paid clicks on its own sites and partner sites, and to be in charge of selling premium, guaranteed search ads for both companies.

When the deal was signed, Yahoo estimated that, when fully implemented, the arrangement would boost its annual operating income by about $500 million, provide capital expenditure savings of about $200 million and increase annual operating cash flow by about $275 million.

Mayer also said she's committed to Yahoo's content business -- both to its user-generated sites, such as Yahoo Answers, and to its professional content sites, which feature videos, photos and articles from partner media companies and Yahoo journalists. Improving personalization of content and ads is key for Yahoo, she said.

At a corporate culture level, she said that she has pushed for a new emphasis on transparency and open dialogue with employees, putting in place tools to encourage feedback, systems to remove bureaucracy and new and aligned performance measurements for the company and its employees.

"These new systems are working to improve our execution," she said.

Mayer said another priority is to hire the best people available, so it's important to make Yahoo an attractive place to work. Already there are signs that this is happening, based on the increasing number of talented people expressing an interest in joining Yahoo, and on the rising number of startups wanting to be acquired, she said.

Since coming on board, Mayer has revamped Yahoo's C-level suite, appointing new people to the chief operating officer, CFO, general counsel and chief marketing officer positions.

 

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