Yahoo’s board of directions has settled on another would-be saviour : Marissa Mayer, Google’s Vice President of Location and Local Services. It is hard to not view this development with a sense of foreboding. Trading at less than 1.5 times book value, Yahoo is a company in desperate need of a turnaround. The needs of a company in the Yahoo’s current situation are decidedly not for an executive whose latest role involved a senior post at a company whose major challenge seems to be how to deploy its $47 billion cash pile to maximum advantage.
Turnarounds are hard. They involve the blocking and tackling that rarely makes the news and certainly does not get CEO’s lauded in the press. Until they work, that is.
The tech industry especially has difficulty with the idea of turnarounds. Turnarounds imply a limit to growth and ambition, a grim focus on the grimy, unsexy parts of business. No “frenemies”, no “white space”, just cash flow, debt service and margins. And yet all markets reach maturity, and many companies at some point call out of rationalization.
Yahoo is a sizable company in need of steady management by someone with the background and skill to necessary to undertake the grim task of maximizing profit, and perhaps, reimagining the company’s focus. I wish Marissa Mayer the best, and if she is successful, she will not have been the first CEO to prove that elephants can dance.
About the author:
David Johnson is a partner with ACM Partners, a boutique financial advisory firm providing due diligence, performance improvement, restructuring and turnaround services to companies, real estate investors and municipalities. He can be reached at 312-505-7238 or at [email protected].