Thanks to a canny series of acquisitions and hires by CEO Marissa Mayer, Yahoo has earned considerable buzz over the past year or so.
But buzz alone doesn’t boost a company’s bottom line. In the fourth quarter of last year, Yahoo saw its GAAP revenue decline 6 percent year-over-year, to $1.26 billion; that included dips in its search and display businesses. Cash and cash equivalents fell from $6 billion to $5 billion over the past twelve months. Wall Street isn’t exactly ecstatic over those numbers, to put it mildly.
Mayer tried to put the best spin possible on the results. “I’m encouraged by Yahoo’s performance in Q4 and 2013 overall. We saw continued stability in the business, and our investments allowed us to bring beautiful products to our users and establish a strong foundation for revenue growth,” she wrote in a statement accompanying the numbers. “In Q4, we launched the new Yahoo Mail, Yahoo Finance, and our new Flickr photo books, while quickening our pace of experimentation.”
Yahoo benefits enormously from its 25 percent share of the Alibaba Group, a Chinese company that specializes in cloud and e-commerce services, and which has enjoyed spectacular growth over the past few years. But the company’s ability to grow core businesses remains an open question, despite a series of high-profile acquisitions since Mayer took over in 2012—including Tumblr (acquired in May 2013 for $1.1 billion), RockMelt, Qwiki, and Summly.
The theory is that Mayer bought Tumblr for its pre-existing community, and many of the others for their engineering talent; but she has yet to integrate all these assets into the sort of cohesive whole that could effectively challenge Google’s well-integrated network of online products. At least those acquisitions have reversed some of the perception that Yahoo is teetering on the edge of history’s trash-bin, with an aging customer base and unexciting offerings. But having somewhat stabilized the company, Mayer needs to show that Yahoo is relevant and capable of growing its bottom line. That could prove a difficult task.