As Mayer joins Yahoo, enthusiasm runs high but earnings slip lower (+video)
Yahoo's second-quarter report showed a slight decline in income and revenue, but marginal improvements in search and ad revenue. It highlights what Marissa Mayer, the company's new CEO, will need to do: redefine Yahoo, explain why it's useful to users, and help it stand out from Google and Facebook.
Yahoo used to be the world's most popular website, and as recently as a few years ago, it still felt sometimes like it was at the center of the Internet. As the biggest US web portal, Yahoo was the place people went for everything from email to news to weather.
But after three years of declining sales, user defection, and a lackluster second financial quarter, the company is looking to Marissa Mayer, a former Google executive, to guide the company toward becoming more than just a stop for users on the way to more interesting content.
Yahoo reported on Tuesday that its net income in Q2 had fallen by 4.2 percent from the same quarter a year ago. The company's revenue declined slightly as well, to $1.22 billion, although it reported a bit of growth in ad and search revenue. The results were slightly better than the market's expectations, but they didn't paint a picture of a company that's growing and evolving. Put another way, Yahoo is making money and has been for years, but the company's gains are modest and its market share is declining.
It might be more accurate to say that Tuesday's earnings call provided the backdrop for Mayer's task as the company's new CEO: to redefine Yahoo's brand by clarifying what it does for customers. That means finding ways to make Yahoo a friendly place for mobile devices, as well as continuing to forge partnerships with content companies so that users visit Yahoo more often and stay for longer. It also means Mayer will have to find ways for Yahoo to stand out from her old employer, Google -- which dominates search traffic -- as well as Facebook, which leads in social networking. Yahoo used to be the biggest seller of display ads, but both Google and Facebook passed it last year.