As Mayer joins Yahoo, enthusiasm runs high but earnings slip lower

Yahoo's second-quarter report showed a slight decline in income and revenue, but marginal improvements in search and ad revenue. It highlights what Marissa Mayer, the company's new CEO, will need to do: redefine Yahoo, explain why it's useful to users, and help it stand out from Google and Facebook.

Robert Galbraith/Reuters/File
Marissa Mayer, a former Google exec, became Yahoo's new CEO on Tuesday just as the company made a lackluster earnings report. In this 2010 file photo, Mayer unveils "Google Instant" at a conference in San Francisco.

Yahoo used to be the world's most popular website, and as recently as a few years ago, it still felt sometimes like it was at the center of the Internet. As the biggest US web portal, Yahoo was the place people went for everything from email to news to weather.

But after three years of declining sales, user defection, and a lackluster second financial quarter, the company is looking to Marissa Mayer, a former Google executive, to guide the company toward becoming more than just a stop for users on the way to more interesting content.

Yahoo reported on Tuesday that its net income in Q2 had fallen by 4.2 percent from the same quarter a year ago. The company's revenue declined slightly as well, to $1.22 billion, although it reported a bit of growth in ad and search revenue. The results were slightly better than the market's expectations, but they didn't paint a picture of a company that's growing and evolving. Put another way, Yahoo is making money and has been for years, but the company's gains are modest and its market share is declining.

It might be more accurate to say that Tuesday's earnings call provided the backdrop for Mayer's task as the company's new CEO: to redefine Yahoo's brand by clarifying what it does for customers. That means finding ways to make Yahoo a friendly place for mobile devices, as well as continuing to forge partnerships with content companies so that users visit Yahoo more often and stay for longer. It also means Mayer will have to find ways for Yahoo to stand out from her old employer, Google -- which dominates search traffic -- as well as Facebook, which leads in social networking. Yahoo used to be the biggest seller of display ads, but both Google and Facebook passed it last year.

Mayer was one of Google's earliest hires, and the first female engineer the company employed. She worked there for 13 years, and is perhaps most famous for perfecting Google's web search and its ultra-clean interface. She also oversaw Gmail, Google News, and image and product search, and two years ago became the vice president of the company's local, mapping, and location services. In short, she's a technologist -- and Yahoo will need that outlook as it tries to recapture Internet users' attention.

For her part, Mayer seems enthusiastic about the challenge. She wasn't present to answer questions at the company's Q2 results announcement on Tuesday; Yahoo says she's busy getting "acclimated" to the new position.

But she said in an AP interview on Monday, "I just saw a huge opportunity to have a global impact on users and really help the company in terms of managing its portfolio, attracting great talent and really inspiring and delighting people." For Yahoo, whose employees and investors are both nervous after years of layoffs and shifts in the company's direction, those words must be reassuring.

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