At Yahoo’s weekly FYI meeting last Friday, CEO Marissa Mayer tried to explain the very big and expensive elephant in the room — the huge amount of money she paid to its fired COO, Henrique De Castro, despite questionable results for his 15-month tenure as her No. 2 exec.

According to numerous sources present, when asked by an employee about the payout, which was upward of $50 million, although others estimate that it could be more than double that — Mayer attempted an unusual parsing of the facts.

She answered that most of the money paid to De Castro was to get him to leave Google — some $39 million in make-whole and retention cash and stock — rather than what Yahoo paid him to work there.

Bokay — although, whatever kitty you want to place the cost in for the De Castro debacle, it still comes out of the very same pockets of Yahoo and its shareholders.

Thus it will be interesting to see what Mayer says more specifically, if anything, when she faces Wall Street analysts tomorrow after the markets close for Yahoo’s fourth-quarter earnings call.

My suggestion: Push how well China’s Alibaba is doing, given that its ever-growing pre-IPO valuation is what has been behind Yahoo’s stock surge. No coincidence that the Silicon Valley Internet company smartly adds Alibaba’s financial performance into its report.

Better to take attention away from Yahoo’s core business, because a range of estimates by analysts show that everyone is expecting more revenue declines, even as rivals continue to have huge growth. This despite increases in traffic and engagement at Yahoo of late.

No matter — Wall Street is expecting Yahoo sales to dip 1.6 percent to $1.2 billion for the quarter. There are hopes for an upside surprise in its non-GAAP earnings per share, now estimated at 38 cents. Investors would be thrilled if it reached 40 cents, in a range that is currently between 33 cents and 45 cents.

The big trouble spot is still display advertising, which has seen strong drop-off, still not made up by Yahoo’s newer and more mobile-friendly stream ads. Also to watch: The monetization progress at Tumblr, if any, where Yahoo is trying to take advantage of its younger demographic.

Search should also be interesting to dig into. Yahoo’s search queries have continued their slow decline, to 10.8 percent in December of 2013, from 12.2 percent in December of 2012. Turning that around is important, since one-third of Yahoo revenue is from its partnership deal with Microsoft’s Bing search, where guarantees disappear in March (they have previously been renewed, and likely will be again).

Overall, it will be most intriguing to see how Mayer spins all this in her now-quarterly video presentation with CFO Ken Goldman. She is nearing her two-year arrival anniversary and, while Mayer has said Yahoo is in a multiyear turnaround (and it is), investors may soon demand a more cogent explanation of what will make it so.

Certainly not De Castro any longer — which raises the question of who will, and how, going forward.



10 comments
Doge
Doge

yahoo needs to make ads relevant. when I see ads like so: "Where are Flu Viruses Living in your Home?" and "new rule in 'your city here'" in yahoo news articles talking about a Colorado High School Student setting himself on Fire in a cafeteria, its not even relevant at all. ads that should show in the news article should be along the lines of health insurance and mental services; not retarded one weird trick ads.


they also need to expand to business services. for example they live stream their quarterly reports now. yahoo can sell this type of services to companies who would like to live stream their quarterly earnings conference calls as well.


guess no one at yahoo thinks outside the box. even though that box is full of people smarter than me, they are quite stupid

Donald McIntyre
Donald McIntyre

It seems the strategy to make the same products better and satisfy consumers daily habits is not working for now. 


My impression is that Silicon Valley high tech companies need to innovate constantly and create new solutions using new technology rather than only continuously perfect what they already do.


I think Yahoo should focus in inventing new things and new services.

The current strategy is pushing nearly all their products and services to number 2 or 3 in all categories, in the internet you need to be number 1 to keep up the momentum.

elio_enidias
elio_enidias

There is no time frame for the Alibaba IPO. It may not happen for a long time.

SilverFish
SilverFish

For a woman who constantly preaches about hiring being an important job, she really screwed up at hiring. The scary part is that she will have a ton of money on hands with Alibaba IPO and waste all that money on acquiring and stopping more companies. That joker hr person of hers, Jackie Reeses will continue to make communication snafus (she already has a few to her credit). Good leaders know how to hire well. Marissa may be a good product manager, but she is a terrible CEO.

Ismael
Ismael

The question that remains to be answered is who hired Marissa to turn around Yahoo continuous "bad luck".

Yahoo needs a marketing super star who understands what triggs traffic and how to capitalize on it without hindering the natural flow of Yahoo ecosystem.

Marissa lacks of that edge and knowledge to push forward a languishing company whose cards are based solely on Alibaba. But what are the sustainable and attainable future plans ? Whats gonna make Yahoo so special and different from its competitors ?

Her speech at CES was just another me-too cheap talk without substance and no strategy at all.

Trying to cosmetic market share and ad revenue losses with potential profits from future IPO (Alibaba) wont fly high.

Maybe it is time for some serious accountability and to double check vision/strategy vs. facts.


SteveMahoney
SteveMahoney

Alibaba - Mobile Wins - Apple Relationship: 3 Bright Spots - Marissa Mayer is young and learning.  Did she make a mistake?  Yep, but she has a lot of money to play with for things given Alibaba partial-sale last year.  Apple uses Yahoo as a KEY mobile partner.  I assume given the connections and Yahoo bought all the mobile tool and readers out there.  


The only thing that Marissa lacks is a TEAM.  I feel bad for her given that she has folks around her that probably are NOT her consigliere right-hand folks.  Build the TEAM and you will scale.


Without a TEAM, you are a ONE-HIT Alibaba wonder. 

Doge
Doge

they could also expand and fix their terrible web hosting services.

elio_enidias
elio_enidias

She tries to divert attention by stirring up the NSA controversy. It's the height of hypocrisy for Yahoo, which earns its bacon from dealing in personal info.

Ismael
Ismael

@SteveMahoneyI think is more a lack of Marissa vision and straight strategy that got Yahoo TEAMS completely spinning around and not knowing where to head or to do.

Nobody in their right mind would have hired Henrique or offered such a huge amount of money to one single (inexperienced) person.

But in all fairness, we all commit mistakes but you can't make a case for the lack of knowledge and leadership.

Ismael
Ismael

@elio_enidias...and handing it over to the Chinese government to arrest their politically motivated opposition...

Yep...free world and all that...