How much time does Yahoo’s Marissa Mayer have to justify her acquisitions?

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yahoo site on chrome
Close up of Yahoo Messenger web page on Goolge Crome browser, one of the most popular voice, video and text messengers on the internet.
yahoo site on chrome
Close up of Yahoo Messenger web page on Goolge Crome browser, one of the most popular voice, video and text messengers on the internet.

In 2014, Yahoo (NASDAQ:YHOO) was on a tear when it came to acquisitions. With very few exceptions, Yahoo would buy a company that either already had a product released or was in the process of releasing one. After the acquisition, the acquired company’s old product or project would be promptly dropped. Many Yahoo analysts label these acquisitions primarily as ‘acquihires.’ Yahoo wasn’t buying companies as much as it was acquiring talent. Much of these buyouts were in the mobile space since Yahoo needs to beef up its talent base in that tech space for it to successfully transition as a mobile-first company. Since these acquisitions weren’t exactly bargain basement acquisitions, Yahoo is under pressure to justify these buyouts. Of course, shareholders, vocally led by activist shareholder firm Starboard Ventures, want this justification to take the form of solid contributions to Yahoo’s bottom line.

So far, Yahoo’s acquisitions have failed to meet expectations as far as profit contributions are concerned. Yahoo already has a total headcount of 12,500 employees and it appears that not all of these people truly help Yahoo achieve its mobile first dreams. Maybe Yahoo should work on paring down divisions and really start hunkering down on its mobile strategy. Sure, Yahoo still gets a ton of traffic but considering how fickle Net users are, it might just be a matter of time until the bulk of Yahoo users move on to a bigger better deal. Marissa Mayer, as I have written earlier, have scored some positive gains for Yahoo but these might not be enough to silence her critics. All eyes are on Tumblr-the blog platform Yahoo bought for $1 billion. Will it be another GeoCities or will it actually add something substantive to Yahoo’s bottom line.

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