Turnarounds take a long time!

Everybody talks about Apple as the classic turnaround story.

Look at this 5 year stock chart a little after Jobs came back to Apple i.e. May 1998 to May 2003 -it’s basically flat for five years.

And then see after that:

Marissa may not make it but if she does, Overnight Success will take a long time

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http://online.wsj.com/article/SB10001424127887323664204578608180731225420.html#printMode

July 15, 2013, 7:47 p.m. ET

Yahoo’s Marissa Mayer Hits One-Year Mark

By AMIR EFRATI & RACHEL EMMA SILVERMAN

Shares Have Soared More Than 70%, but Little Evidence Yet of a Real Turnaround

Yahoo Inc.’s share price has soared more than 70% since the arrival of Chief Executive Marissa Mayer one year ago, but there isn’t much evidence yet of a fundamental turnaround at the veteran Web company.

The stock rise at Yahoo, which reports second-quarter financial results Tuesday, gives Ms. Mayer breathing room to position the company for long-term revenue growth in its core online-advertising business even if that means sacrificing market share in the meantime.

It also provides more time to prove a payoff from the 38-year-old Ms. Mayer’s acquisition spree. Yahoo during her yearlong tenure has already snapped up 17 technology startups, including one sizable asset, blogging site Tumblr, which cost $1.1 billion.

Financial benefits from the purchases won’t come soon, since many of the companies were struggling at the time Yahoo purchased them or had only a handful of employees and didn’t yet generate revenue. But the deals bring Yahoo plenty of engineering and product-management talent.

Along with other moves to make Yahoo more technology-focused, like Google Inc. —where Ms. Mayer worked for 13 years—people inside and outside of the company say morale has improved in Yahoo’s engineering and product divisions.

Yahoo’s share price rise—which compares to a 24% rise in the broader Nasdaq Stock Market over the same period—has mostly come from the perceived value of Yahoo’s equity stake in Alibaba Group Holdings Ltd., the China-based ecommerce giant that is planning an initial public offering. Investors will be closely watching Yahoo’s quarterly earnings report for information about Alibaba’s financial performance.

Overall, revenue at Yahoo last year rose by 2%—much slower than its industry peers—to $4.5 billion, and its most important line of revenue, the sale of graphical and video ads on its sites, has taken a nose-dive in recent quarters, dropping 11% in the first quarter of this year.

Many analysts expect another double-digit decline in display ads during the second quarter, as advertising agencies have said they aren’t raising their budget allocation for ads on Yahoo or are spending less money on Yahoo than before.

"Expectations have been low" for Ms. Mayer to turn Yahoo around, said Jordan Rohan, a longtime Internet-stock analyst at Stifel Nicolaus & Co.

Ms. Mayer became Yahoo’s sixth CEO in five years, including two interim CEOs. Rivals such as Google and Facebook Inc. had zoomed past Yahoo in the online-ad industry, and there had been much discussion among Yahoo’s board about whether the company should remain an independent, publicly traded entity.

Since her arrival, by contrast, Yahoo’s image in Silicon Valley has improved.

"It’s no longer shameful to work at Yahoo," an employee said recently.

A Yahoo spokeswoman said "more people are applying to work at Yahoo and more employees are staying," adding that the rate of attrition, or employee turnover, is half of what it was a year ago. She declined to make Ms. Mayer available for comment.

When Ms. Mayer was hired, Yahoo’s board promised to give her several years to change its course, people familiar with the matter have said.

Ms. Mayer’s top goal is to turn Yahoo into an essential fixture on people’s mobile devices. So she has put a strong focus on redesigning the company’s suite of mobile apps, which include Yahoo Mail, Yahoo Sportacular and its all-in-one Yahoo app. There are some signs the apps have attracted more users.

According to Onavo Inc., which develops apps that are installed on several million Apple Inc. iPhones, 16% of those iPhone owners used a Yahoo-made app in June, up from 8% in July of last year. Including Tumblr, the June figure rises to 22%.

Despite the gains, Yahoo is far behind its competitors. Apps by Facebook, Google and Twitter Inc. were used by 80%, 69% and 31% of Onavo’s iPhone owners in June, respectively.

Ms. Mayer’s blockbuster acquisition of Tumblr, which has more than 100 million blogs and generates very little revenue, also is a risky, long-term bet on introducing a younger demographic to Yahoo’s services. Some analysts and tech-industry observers say Tumblr’s value was falling, not rising, when Yahoo bought it.

To get more visibility on mobile devices, Yahoo has been talking to Apple about preinstalling more Yahoo services on its devices, people familiar with the matter have said, though it is unclear if Apple is inclined do so.

As Ms. Mayer focuses on developing better Web services, including a deeper emphasis on personalization features for individual users, Yahoo’s online-ad market share continues to dwindle.

Yahoo’s share of the $117 billion global market for digital-ad spending will be 3.1% this year, down from 3.4% in 2012, according to projections by research firm eMarketer Inc.

Among its top 10 competitors in online advertising, only one—AOL Inc. —is expected to also capture a smaller share of the market this year versus last year, eMarketer said.

"Our biggest problem is impressions," or usage of Yahoo’s websites, Ms. Mayer said in February. "The way to grow revenue is to grow usage or prices. We’re successfully growing prices…we need to grow usage."

Meanwhile, Ms. Mayer has attracted attention as much for workplace issues as technology.

She joined Yahoo when she was six months pregnant with her first child. Though a self-described "geek" who chooses to speak sparingly on issues of working women and leadership, Ms. Mayer’s job and rapid return to work after the baby’s birth put her at the center of renewed debate over whether women can have both fulfilling work and family lives. Also influencing the debate was the publication of "Lean In," a book by Facebook Chief Operating Officer Sheryl Sandberg that advocated greater engagement at work for women.

In a TV interview last fall, Ms. Mayer remarked that "the baby’s been way easier than everyone made it out to be," a comment that irked some working parents who aren’t as affluent.

In February, meanwhile, Ms. Mayer decided to end Yahoo’s long-standing telecommuting programs, arguing that the company needs to be "one Yahoo" to benefit from the insights and speed of employees who work together physically.

After weathering criticism that the work-from-home edict was inhospitable to working parents, the company later in the spring announced changes to its parental leave policies that bring them closer to those of Google’s. Yahoo now offers up to 16 weeks of paid leave for new mothers, roughly doubling what most mothers got in the past. The firm also offers paid paternity leave—a relatively rare perk—and an eight-week unpaid sabbatical for every five years of tenure with the company, among other new perks.

Write to Amir Efrati at amir.efrati and Rachel Emma Silverman at rachel.silverman

A version of this article appeared July 16, 2013, on page B1 in the U.S. edition of The Wall Street Journal, with the headline: Yahoo’s Marissa Mayer, One Year Later.

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