For all the talk about her maternity leave and her views on telecommuting policies, Marissa Mayer’s time as the CEO of Yahoo Inc. is now being defined by something else entirely – an acquisition frenzy.
This month marks Ms. Mayer’s one-year anniversary as the latest head of Yahoo, a former powerhouse that has suffered in recent years from a lack of direction and an inability to dent Google Inc.’s dominance of the Internet search business. During that time, she has overseen the purchase of at least 16 companies – making acquisitions the key tool in her effort to focus Yahoo on more profitable and fast-growing segments of the technology sector, rather than the sluggish display advertising business, which had been its core revenue generator for years.
Yahoo’s latest purchase, announced this week, is a startup called Xobni (Inbox spelled backwards). The company builds software to manage e-mail accounts and address books. Yahoo hopes to incorporate Xobni’s technology in some of its own communication software. No purchase price was announced, although estimates in various media outlets ranged from $30-million to $70-million (U.S.).
Xobni marks Yahoo’s third purchase in as many days. On Monday, the company announced its acquisition of Bignoggins Productions, which builds mobile apps in the fantasy sports industry, and is likely to mesh well with Yahoo’s wildly popular sports offerings. The following day, Yahoo purchased Qwiki, an iPhone app that lets users quickly create and share video clips.
One reason Yahoo is able to make so many purchases is its massive stockpile of cash. Even after the Tumblr purchase, the company is still likely sitting on about $4-billion or more.
“They’re in unique position where they can play corporate VC,” said Brian Wieser, an analyst with Pivotal Research Group.
“Core display [advertising] has no growth prospects ... [but that is] an industry problem.”
Many of Yahoo’s acquisitions during Ms. Mayer’s time as CEO have focused on mobile apps. In March of this year, the company surprised many observers when it paid a reported $30-million for an app called Summly, created by a teenager Nick D’Aloisio and designed to summarize news stories. Two months later, Yahoo paid $1.1-billion for blogging site Tumblr – its biggest acquisition in a decade.
The company may also still be in the running for U.S. online TV site Hulu, although it appears to have only a distant shot at winning a bidding war for the service. Yahoo had also tried to buy the French video site Dailymotion, but backed off from that plan after the French government raised concerns about the purchase.
In all, Yahoo has bought roughly as many companies during Ms. Mayer’s one year in the CEO’s office as it did in the five years prior to the start of her employment last summer. Some of the purchases have been so-called “acqui-hires,” completed solely to bring new talent to Yahoo. Others have been focused on integrating other companies’ technologies into Yahoo products.
Ms. Mayer has used the support of Yahoo’s board not only to make numerous purchases, but also to shut down various Yahoo services that gained little traction with consumers. Indeed, just last week, Yahoo announced the partial or total closure of more than a dozen products and services.