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.



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