The Marissa Mayer Effect

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Until last summer, Yahoo! (NASDAQ: YHOO) looked like a dying company, one that peaked in the late ‘90s. Now it’s in the midst of a resurgence, growing profits and shelling out a billion dollars to buy social-blogging platforms.

The reason for the turnaround? Marissa Mayer.

Prior to hiring Mayer as CEO last July, Yahoo! had cycled through four CEOs in four years. Mayer has brought stability, growth and – most importantly – relevance back to a company that seemed on the brink of going the way of AOL (NYSE: AOL).

Since Mayer’s hiring on July 16, 2012, here are some of the improvements Yahoo! has made:

  • Yahoo! shares have shot up 70%, closing at $27 today – the stock’s highest level in five years.
  • Profits increased 43% last quarter, and nearly quadrupled last year compared to 2011. To be fair, however, Mayer only presided over six of those months.
  • The company bought social-blogging site Tumblr yesterday for a cool $1.1 billion – its most expensive acquisition in a decade. Founded in 2007, Tumblr has attracted 300 million monthly visitors wooed by the site’s platform, which allows users to post text, photos, videos and other materials “from anywhere.” Only a company with cash to spend can make that kind of deal.
  • With Mayer at the helm, Yahoo! has expanded its mobile footprint by creating new apps – a weather app for Apple (NASDAQ: AAPL) iPhone users, an email app for other smartphones, and an app that allows iPhone and iPad users to view and share photo using its Flickr service.
  • The company completed a $7.6 billion deal with Chinese e-commerce group Alibaba back in September. The deal, which was years in the making, netted Yahoo! $1.3 billion to finance acquisitions – money the company has already put to good use.

Yahoo! was in the dumps for years as the company lacked true leadership, direction and innovation. With Marissa Mayer running the show, Yahoo! is suddenly hip again, snatching up a popular social media company like Tumblr the way Facebook (NASDAQ: FB) did when it bought out Instagram last year.

Investors trust Mayer. And right now the 37-year-old CEO is leading an improbable resurgence at a company that 10 months ago appeared beyond saving.

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