Wall Street Weighs In on Yahoo! (YHOO) New CEO Mayer; Sees More Focus on Product Over Content

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Yahoo!, Inc. (Nasdaq: YHOO) officially "Googled" for their new CEO.

Not to say that Yahoo! used some Google-like tactics for poaching executives, or that it even used the robust search engine to evaluate several candidates bios. No, Yahoo! simply appointed a Google executive to lead their company out of the abyss.

Today, Marissa Mayer is starting off as CEO of Yahoo! We've already provided a little contrarian insight into what might happen, but what are analysts saying?

• Pivotal Research Group says Mayer is a "huge beta" choice, meaning she is well regarded with potential for success, but isn't versed well in several areas critical to Yahoo!'s turnaround. Pivotal issues some key points:
  • Possibly management disruption if former interim CEO Ross Levinsohn leaves. Several people were brought in under his short watch, and they might depart in the near-term as well.
    
    
  • Mayer is overseeing a company with 10,000+ employees, much larger than anything she's ever managed.
    
    
  • Lack of experience in relationship-based sales, something critical for Yahoo! moving forward.
    
    
  • Mayer will excel when it comes to product improvements.
    
    
  • Yahoo! will need an operational overhaul. While Mayer has experience in creating new organizations, Pivotal isn't sure how much Mayer has had here.
    
    
  • Mayer should be able to create excitement around the Yahoo! brand.
  Pivotal rates Yahoo! at Buy with a $19 price target.
  
  
• Wells Fargo is also cautious, but does laud Mayer for her role in development of the key Google (Nasdaq: GOOG) core search product.
  
  First, Wells notes how Yahoo! relies on marketing budgets, going back to the relationship-based sales discussed above. This is something that Levinsohn had experience in, while Mayer is more geared toward engineering aspects of search in user interface. Wells commented, "While it's natural to speculate that Mayer will bring a renewed "product focus" to Yahoo!, we believe the details of her strategy (when revealed) will need to articulate a clear monetization path."
  
  Levinsohn had a "tent pole" ad monetization strategy, which brought in dollars around major entertainment events. Again, Mayer will need to be clear about where she thinks Yahoo! should go in the future.
  
  Following the monetization of Asian assets, more focus will be on Yahoo!'s core strategy. Former CEO Scott Thompson "promised more investment behind technology and commerce, while Levinsohn's actions suggested a course correction toward content and partnerships."
  
  Wells has an Overweight rating on Yahoo!, with a valuation range of $11 - $17.
  
  
• Evercore Partners focused more on whether the appointment of another Google exec (Michael Barrett came from Google and was the former AdMeld CEO) means Yahoo! will need to invest more in its ad stack program.
  
  Evercore commented, "Ad technology headwinds include a lack of demand-side platform and real-time bidding capabilities and shrinking class 2 inventories relative to faster growing platforms (e.g., Google, AppNexus), which, longer-term stand to pressure yield." The firm sees about $275 million in savings from eliminating 1,000 ad tech staffers.
  
  The risk-reward at Yahoo! has also increased for Evercore. Catalysts moving forward include: "the potential outsourcing of its ad technology platform, an upward re-pricing of its roughly $14 billion ownership in Alibaba Group, either based on a repricing of the convert or a public offering, potential sale of its $7 billion Yahoo! Japan stake to Yahoo! Japan, and additional buyback activity with about 25 percent authorization in place."
  
  Evercore currently carries an Equalweight rating and $18 price target on Yahoo!
  
  
• Needham & Company thinks Mayer's product background will drive growth for Yahoo! versus its content strategy.

Yahoo! is down about 1 percent Tuesday, heading into afternoon trading.

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