How should we measure success at Yahoo! (YHOO) over CEO Marissa Mayer's tenure?
Obviously, objective measures like EBITDA tell one important story. On that basis, Yahoo did $1.5 billion in EBITDA in 2011 -- the last full year prior to Mayer joining the company -- but less than a third of that over the past 12 months.
Another measure is to analyze a turnaround through the lens of what a new CEO first says he or she plans to do. Let's look at Mayer's public statements on that.
The Yahoo! CEO hasn't given many interviews since she started at YHOO, but recently noted during a sit-down with Charlie Rose that she had just come up with a three-year turnaround plan -- almost four years into her tenure.
Of course, Mayer might have picked Rose for the interview because she's sat down with him before. Back in 2009 when she was still working at Alphabet/Google (GOOG, GOOGL), she did a long interview with Rose in which he specifically asked her about YHOO.
Here's what she said at the time:
Rose: A lot of people argue that Yahoo! lost its place because it lost its emphasis on engineering and technology and focused too much on marketing.
Mayer: Well, I definitely think that's what drives technology companies is the people, right? Because in a technology company, it's always about what are you going to do next. ... So then it comes down to, well, who is going to build that thing that you do next. So if you have the best people --
Rose: So talent is the key.
Mayer: That's a huge benefit. And I do think that some of what happened with Yahoo! was a little bit of that lost focus. But I also think that over the events of recent years, they've lost a lot of their good people. There are still a lot of good people there, and we definitely are cheering for Yahoo! because we really think that the Web is better off.
If you think that Yahoo! had a talent problem in 2009, it certainly hasn't gotten better under Mayer since 2012. Any new talent that has come on has probably arrived via the almost $3 billion of acquisitions that Yahoo! has undertaken under her tenure. But much of that talent likely left just as soon as workers' "rest-and-vest" commitments ended following Yahoo!'s acquisition of their firms.
When Mayer joined Yahoo! in 2012, she didn't hold her first earnings call with analysts until she was three months into the job in October of that year. She had gotten her hands around the company by then and proudly introduced new members of her executive team.
For example, Mayer touted Henrique De Castro as "one of the most respected and accomplished businesspeople in the realm of Internet advertising" -- but fired him 14 months later. The CEO also lauded Jackie Reses and Kathy Savitt, although both ultimately quit the company in 2015.
Later during the October 2012 analyst call, Mayer took a question about when Yahoo! would be able to grow at industry rates again. Her response:
"Well, to be clear, my goal isn't to grow at the industry rates. My goal is to grow faster and more than the industry rate. That said, I do think growing at industry rates is the first step. I think it will take multiple years to get to where I want the company to be, which is above market growth. That said, I do think that there will be measurable progress, such that shareholders will be able to see growth at the industry level or above in the meantime. Today, we already have some areas where we are growing at an industry level. We just have a few areas where we're not that really have some potential upside even if we can just get to growing at the industry rate."
Well, we're now almost four years into her turnaround, which many people would conclude represent the "multiple years" that Mayer was referring to. But Yahoo still isn't growing at industry rates, let alone any above-market growth levels.
On YHOO's latest earnings call in February, Eric Sheridan of UBS asked Mayer why she was guiding so-called "MaVeNS revenue" to grow only 12% in 2016 when the industry was expecting to grow in the mid-teens.
Mayer's rationalization: "We basically worked with a tight revenue number to really drive a larger set of cost efficiencies across the business. But we feel confident that given the industry trends and our own product momentum here, that this is a reasonable number."
The simple answer here is that leadership is tough.
Before Mayer took over at YHOO, she theorized that the company should work to keep its top talent -- but the talent drain has only accelerated on her watch. The New York Times recently reported that about one-third of Yahoo's workforce quit the company last year.
And when Mayer first started, she said Yahoo! hoped to get back to industry growth rates soon, then eventually grow at a higher-than-average pace. But almost four years into Mayer's tenure, Yahoo! is still growing at below-industry rates.
And now, Mayer has unveiled a three-year turnaround plan for the company and wants investors to support her? Sorry, but it's time for a change at the top at YHOO.