Why Microsoft Needs the Next Marissa Mayer by Chris Preston
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Steve Ballmer is out as Microsoft (NASDAQ: MSFT) CEO.
After 33 years with the software giant, the last 13 spent as its CEO, Ballmer was essentially forced into retirement by Microsoft's board of directors. Once the richest company on the planet, Microsoft has lagged behind Apple and Google in recent years in key consumer markets, namely mobile.
Microsoft still dominates the PC market. But PCs are becoming ancient. The company's board wants to attract younger and hipper consumers. At 57, Ballmer realized he might not be the right person to lead that charge.
"Maybe I'm an emblem of an old era, and I have to move on," Ballmer told The Wall Street Journal.
If Microsoft wants to enter the "new era," it might want to take a page from Yahoo's book.
Until the summer of 2012, 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 the 37-year-old Mayer as CEO two summers ago, 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).
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Since Mayer's hiring on July 16, 2012, here are some of the improvements Yahoo! has made:
Yahoo! shares have more than doubled. When Mayer took the reins, Yahoo! shares were going for $15.60 a pop. Yesterday the stock closed at $34.97- a return of 123.5% in the Mayer era.
Profits increased year over year in each of Mayer's first four quarters on the job.
In May, the company bought social-blogging site Tumblr 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 photos using its Flickr service.
The company completed a $7.6 billion deal with Chinese e-commerce group Alibaba last September. The deal, which was years in the making, netted Yahoo! $1.3 billion to finance acquisitions - money the company has since been putting 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 38-year-old CEO is leading an improbable resurgence at a company that 16 months ago appeared beyond saving.
Microsoft's position isn't as precarious as Yahoo's was before Mayer came on board. The company still managed to increase EPS 29% in the last year on Ballmer's watch.
But if Microsoft wants to close the ever-widening gap between itself and Apple and Google, it may want to skew younger in its next CEO hire.
In short, Microsoft needs to find its Marissa Mayer.
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