Yahoo (YHOO) saw an immediate stock bounce Tuesday morning following the
company's announcement that Google (GOOG) executive Marissa Mayer would be its
next CEO, but that gain evaporated through the morning as stocks fell.
Mayer, 37, was employee No. 20 at Google and spent 14 years shaping the
look and feel of the Mountain View Internet search giant's offerings, but
stepped into her new role Tuesday morning as the fifth CEO at Yahoo in the
past year.
Sunnyvale-based Yahoo has struggled to retain its once-dominant position
on the Web, losing out to Google and Facebook in online advertising and other
important ventures. The company's downturn has been most evident in its stock
price, which has never again neared the price of $33 a share Microsoft offered
for the company in 2008.
Tuesday morning, Yahoo stock opened at $15.85, an increase of $0.20, or
1.3 percent, from Monday's closing price; Google also moved up, rising $3.51,
or 0.6 percent, at the open to $578.43. However, both stocks dropped along
with the major U.S. indexes within the first hour of trading, as Federal
Reserve chief Ben Bernanke spoke to Congress about the economy. At 7:30 a.m.
Pacific time, Yahoo had dropped to $15.61, 0.2 percent lower than Monday's
close, and Google had fallen to $570.99, 0.7 percent lower.
Enthusiasm from Yahoo's choice took a similar route: Effusive at first,
less enthusiastic as time stretched on. After the "wow" factor dropped away,
analysts began to question the former Google executive's ability to drag Yahoo
out of the deep hole dug in the past five years.
Global Equities Research analyst Trip Chowdhry said in a note Tuesday
morning that Mayer "is a great engineer, but has weak business sense, ...
(and) has a penchant for UI design, but lacks strategic thinking."
In conclusion, Chowdhry wrote "If investors think, that the problem with
Yahoo is product-specific and needs an engineering solution, then new CEO is a
perfect choice. If investors think that the problems with Yahoo are complex
interrelations of strategy, business, technology, market and positioning, then
(Mayer) is a poor choice."
Other analysts who weighed in after the initial round of extremely
positive reviews also pointed out that Mayer's experience is rather one-note,
while the problems at Yahoo are broad.
"What she did at Google was really focus on the user experience more than
anything else; Yahoo does need that," Macquarie Securities analyst Benjamin
Schachter told Bloomberg News. "But it needs many other things as well. The
fact that she had not been a CEO before certainly raised some eyebrows."
