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."
Most Popular Stories
- Social Media Campaign Increases Organ Donor Registrations
- Airport Garners Social Media Award
- What Will Happen When Quantitative Easing Ends?
- MillerCoors Taps New Hispanic Ad Agency
- Immigration Reform Would Decrease U.S. Budget Deficit
- Aetna Leaving California's Individual Health Insurance Market
- Calories Count: Starbucks to Post the Numbers on Menu Boards
- Tea Party Wants to 'Audit the IRS'
- Honda Says Sorry About the Lack of Electric Fits
- Patriots' Aaron Hernandez Questioned in Slaying