Mayer's First Big Win At Yahoo Is Making It Relevant

| About: Altaba, Inc. (AABA)
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Yahoo (YHOO) CEO Marissa Mayer has already done something I would have thought impossible earlier this year. She has made the company relevant again.

News that the search company would ignore Microsoft's "Do Not Track" by default in Internet Explorer 10 was a big story. It would not have been a big story in March -- people wouldn't have noticed it.

Our Dividend Kings calls the stock "deeply discounted" at its present price of nearly $17/share, based on a price of nine times EBITDA and the willingness of the board to listen to the CEO. But it was an even bigger bargain in June, and no one was biting.

What Mayer has mainly done is create her own version of Steve Job's Reality Distortion Field. Her biggest acquisition so far has been for $10 million -- but Justin Bieber was an investor, so it's all good. She has been making talk about moving toward mobile, but mainly she has been clearing out the deadwood in the executive suite.

Here is a good example of the field in action. Yahoo and Bing together grew by 9.6% in the third quarter, against less than 1% for Google (NASDAQ:GOOG). But Yahoo's growth was from a very small base, and its "success" was driven far more by Microsoft's (NASDAQ:MSFT) actions than its own.

So suddenly people care what its new logo looks like and analysts are pounding the table for the stock. This after a slight beat on revenues and earnings for the quarter ending in September, with no forecasts going forward.

This is sort of what happens when a heavily hyped football coach is hired by your favorite team. Sometimes it's Jim Harbaugh, and your team is the 49ers. But sometimes it's Rex Ryan, and your team is the Jets.

Now, I believe in Yahoo myself. I bought 100 shares soon after Mayer joined, as a speculation. And I appreciate how the image of progress can be just as important in technology as progress. I know she's building a cadre of ex-Google employees around her, and I have a good deal of faith in the new team. But the stock has gained over $1/share since her hiring, while the fundamentals have not changed.

I'm not selling, in other words. But I'm not taking this out of the speculation category yet, either.

Disclosure: I am long YHOO, MSFT. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.