Yahoo! CEO Marissa A. Mayer was excited to talk about the company’s turnaround during her tenure. Customer engagement on a mobile level was a key component during this ongoing turnaround.
During the company’s Feb. 2 fiscal fourth-quarter conference call, Mayer talked extensively about the turnaround.
“Yahoo! today is a far stronger, more modern company than the one I joined 3 ½ years ago,” she said, according to Seeking Alpha. “We’ve tripled our mobile audience to more than 600 million monthly users, improved many partnerships, streamlined our data centers, hired incredible technical talent, and invested wisely to meet future needs. At the same time, we shifted resources toward growth-oriented businesses and markets by closing 22 offices and sun-setting more than 120 products and features. As a result, in 2015 alone, about a third of our revenue was completely new revenue with over $1.6 billion attributable to Mavens: Mobile, video, native, and social.”
In a turnaround, a company must, literally, turn around declining revenue and make it grow, Mayer noted.
“There are two ways to do that: By returning current business lines to growth, or by adding new business lines that grow,” she added. “When I arrived at Yahoo!, I reviewed all the lines of business. Each one was in decline and had been for years. Worse, we depended heavily upon banner ads and desktop users, both of which were declining in line with industry trends. That was the bad news. It meant we were sitting on about $5 billion of deteriorating revenue, with essentially no clear path to growth. We needed to turn that around, that declining revenue, with new businesses, not existing ones. And we needed something that was going to be big enough, and grow fast enough to matter to a $5 billion business. The next decision you have to make in a turnaround is do you completely cut deteriorating revenue lines, so you can show significant growth faster, or do you try and stem the decline so you have the stability, but know that the headwinds will last longer as legacy revenue continues to deteriorate? We chose the latter. Given the size of our revenue and user base, we really didn’t have a choice.”
Mayer knew Yahoo! had a large, but declining base of revenue.
“We knew it’d be irresponsible to walk away from large streams of revenue and profits prematurely, and we knew we had to invent new businesses that were extremely fast-growing and large enough to be material,” she explained. “This would have meant that we would have had some amount of time where revenue was flat to down. However, during that period, the makeup of the revenue would change dramatically. As an analogy, it could be described as a tectonic shift or the plates shift beneath your feet in terms of revenue composition, but you stay at roughly the same elevation in terms of total revenue.”