x Abu Dhabi, UAEMonday 24 July 2017

A pregnant pause at Yahoo may bear fruit

Although she is a mother-to-be, the incoming chief executive at the struggling internet giant has a good opportunity to wield her influence and make her mark early.

Marissa Mayer, the chief executive of Yahoo, faces the challenge of turning a company with an array of products and assets into a fully integrated internet brand.Andrew Harrer / Bloomberg News
Marissa Mayer, the chief executive of Yahoo, faces the challenge of turning a company with an array of products and assets into a fully integrated internet brand.Andrew Harrer / Bloomberg News
Marissa Mayer, 37, the newly appointed and heavily pregnant chief executive of Yahoo, is the troubled internet company's fifth appointment to the post in five years.
"Recruiting Marissa Mayer as CEO is a coup for Yahoo," says Tim Shepherd, an analyst at the international research firm Canalys.
"Her experience and seniority as an executive within Google and her product-focused contributions to successful and popular products from search to maps to news make her a good choice."
But Ms Mayer has a huge task ahead of her in turning a company with disparate products and assets into a fully integrated internet brand capable of rivalling market leaders such as Google and Facebook. As the incoming chief, she inherits a legacy of a string of failed strategies by forerunners such as the outgoing Ross Levinsohn, her predecessor, who had been trying to grow Yahoo into a media giant during his interim term and was largely failing.
But Yahoo's policy of operating a revolving door for its chief executives is being seen as increasingly ill-advised in an era when Silicon Valley IT companies are largely judged by the charisma of the company head.
"Let's be fair, it takes between five and seven years to turn a company around, even [Steve] Jobs couldn't do it any quicker," says Rob Enderle, an analyst at the Enderle Group in California's Silicon Valley.
"[Mr] Levinsohn didn't fail, he wasn't in long enough to make much of an impact."
In Ms Mayer's favour is the fact Yahoo owns some of the most visited websites on the internet, not to mention US$2.4 billion (Dh8.81bn) in cash, plus stakes in overseas companies such as the Japanese and Chinese Web giant Alibaba.com that are together estimated to be worth more than $10bn. Yahoo also has an extensive physical presence with offices in more than 30 countries, regions and territories.
Yahoo's assets are, however, diluted by offerings such as Yahoo Maps, which consumers generally seem to regard as a poor man's version of Google Maps. This has prompted cynics in the Silicon Valley investment community to remark that the best strategy any incoming chief executive could adopt would be to asset-strip the company and sell off the parts for more than the value of the whole.
But there is a growing view that Ms Mayer has a real chance of re-establishing Yahoo as a top internet brand if she can focus on products and technology rather than trying to evolve the company into a media organistion. The global market for internet services on mobile phones is still largely up for grabs and Yahoo has already made some inroads. If Ms Mayer can generate compelling new mobile applications Yahoo could quickly make up some of the ground on Facebook and Google. "Rejuvenation for Yahoo will be contingent upon delivering innovative and compelling new product offerings," says Mr Shepherd.
"That will require a fresh and untainted approach, best found outside the company, and this should be exactly what Ms Mayer is able to offer."
However, some industry watchers, such as Shar VanBoskirk, an analyst at the international research company Forrester, believe product development may be too narrow a focus and what Yahoo really needs is a strategic visionary.
But the main criticism of Ms Mayer is she is taking the chair at a time when she is more than six months' pregnant. "People are still getting used to women CEOs. I doubt most have wrapped their heads around pregnant women CEOs," says Mr Enderle.
But he adds much of the heavy lifting in a company turnaround is initially done by the marketing and finance department, so if Ms Mayer selects a strong enough staff her pregnancy is unlikely to become an issue.
Mr Shepherd points out Ms Mayer might be able to shun the spotlight, despite her high-profile image.
"The fact that she is pregnant will, of course, mean that she will be absent from the spotlight for a time before too long," he says.
"But there is no reason that this should be a problem."
There is a growing sentiment that, far from being a potential problem, Ms Mayer's pregnancy may offer Yahoo an advantage.
Many incoming chief executives are guilty of appointing weak lieutenants to minimise the possibility of being thrust aside by a rival.
But Ms Mayer does not have that option if she is to leave the company in safe hands while on maternity leave.
"Marissa won't really have this choice and if it does result in a stronger team the pregnancy might actually turn out to be an advantage," says Mr Enderle.
twitter: Follow and share our breaking business news. Follow us
iPad users can read the digital edition of business section as it was printed via our e-reader app.  Click here