You may already know, for example, that she once spent $60,000 at a charity auction to lunch with Oscar De La Renta, or that she’s partial to Stuart Weitzman shoes, or that her trademark bob is perfected by stylists from San Francisco’s DiPietro Todd salon.
Of course, most investors and entrepreneurs couldn’t care less about Mayer’s personal shopping. What they really want to know is where the Stanford-trained engineer and self-described “geek” will seek out acquisitions for Yahoo, and when she’ll begin writing checks.
Likely, her first purchase will come quickly.
For one thing, Mayer knows Yahoo intimately, having worked at its cross-town rival, Google, for so long. According to Sam Hamadeh, founder of the private company research firm PrivCo, “It’s not like [Mayer] is Meg Whitman,” who became Hewlett Packard’s CEO last September. Whitman quickly vowed to hold off on any large acquisitions until at least 2013, and some attributed her decision to her unfamiliarity with HP’s space.By contrast, “Google and Yahoo have similar models in many ways,” says Hamadeh.
There’s also no better way to gain a view into the most interesting startups than to start acquiring some, notes economist Paul Kedrosky. “[Mayer] needs to take that fire hose of startups that used to be directed at Google and redirect it at Yahoo. And the way you redirect it is to show that you’re a frequent, active acquirer.”
Mayer is no stranger to acquisitions. Google bought nearly 80 companies last year alone, and as a VP, Mayer was reportedly known for trying to push the company to make others, including buying the business reviews site Yelp in 2009. At the time, Yelp turned down Google’s offer of more than $500 million. It went public in March and is now valued at $1.4 billion.
Still, Mayer will have to settle for small-scale acquisitions, at least for now. Unlike Google, “Yahoo doesn’t have a lot of billion dollar bullets it can blow,” notes Rick Summer, a senior equity analyst at Morningstar. “It certainly can’t go elephant hunting,” he says, not with just $1.9 billion in cash and short-term investments, a far cry from Google’s $49 billion.
With major restructuring ahead – industry observers expect to see ample layoffs at the 12,000-employee company – a sizable acquisition would be disruptive, too, suggests Hamadeh. He thinks Mayer should instead steal a page from Facebook, targeting small “acqui-hires,” as the cool kids say. “Yahoo’s number one priority [should be] landing talent right now,” he says.
Kedrosky agrees. “There’s just no reason to go out” and copy, say, Mayer’s former Google colleague, Tim Armstrong, who has made several splashy and largely disappointing gambles since becoming CEO of America Online in 2009. Such “grand gestures are old-style CEO thinking,” Kedrosky says. He thinks Mayer is more likely to “build up [Yahoo’s most promising] areas and inject fresh talent into them.”
The biggest question now is whether Mayer sees the most promise within the company or outside of it. (She did not participate in Yahoo’s second quarter earnings call on Tuesday, a report that highlighted Yahoo’s declining earnings, revenue and market share, and left analysts without any clues to her thinking.)
Given that Yahoo Finance is objectively one of Yahoo’s greatest strengths, Kedrosky thinks a company like specialized financial data provider Whale Wisdom might make sense as an acquisition target. “It would deepen what made Yahoo Finance a success in the first place, its democratization of a lot of data and historical price information,” he argues.
To strengthen Yahoo Mail’s offerings, Kedrosky also suggests a long look at Baydin, a Mountain View, Calif.-based maker of email management tools that has so far raised just $400,000 in seed funding and whose plug-in, Boomerang, is fast growing in popularity.
Meanwhile, Morningstar’s Summer notes that there have “long been rumors about Yahoo’s relationship with Hulu and whether it could be tighter and more formalized,” but declines to ballpark the likelihood of a tie-up, calling it “beyond speculation.”
Brian Wieser, a senior research analyst at Pivotal Research Group in New York, thinks Yahoo should swing for the fences. As he told me yesterday, “[Yahoo’s] investors should be supportive of things that may come across as crazy ideas, not least because it’s better than the alternative and because if it does work, there’s more potential for upside.”
Summer isn’t nearly as sanguine, though. “Do I think she’ll swing for the fences? It’s hard to imagine. The board and investors will be very supportive of prudent investment. I think it’s very unlikely they’ll support aggressive spending.”
Image: Marissa Mayer poses at Google’s Mountain View, Calif., headquarters, in this February 24, 2009 file photo. Credit: Reuters/Noah Berger/Filesa