Top challenges that await Marissa Mayer as Yahoo CEO

Like a lot of math geeks, Marissa Mayer enjoys tackling complex problems. She will find plenty of those as the latest CEO at Yahoo. The troubled company has turned into a vexing brain-twister as its financial performance has steadily deteriorated even though it still boasts one of the Internet's biggest audiences and best-known brands.

Yahoo announced Tuesday another lackluster set of financial results in the second quarter. The company earned $227 million, a 4 per cent decrease from a year ago. In the last five years, Yahoo's stock has tumbled 41 per cent. It closed Tuesday at $15.60.

Mayer, 37, will try to reverse the financial malaise as Yahoo tries to match the growth of rivals Google and Facebook Inc. Both companies have been prospering as advertisers spent more money on Internet advertising.

Consider some of the challenges that greeted Mayer Tuesday as she took over Yahoo's helm after a highly successful 13-year career at Google.

ACQUIRING AN ALLY

Mayer's to-do list probably will start with deciding the fate of Ross Levinsohn, who had made a positive impression among analysts during his two-month stint as interim CEO. He took over after the mid-May ouster of Yahoo's previous leader, Scott Thompson, who left amid a flap over misinformation on his official biography.

Mayer has previously worked with Levinsohn while she was overseeing Google's Internet search team and he was running the digital operations at Rupert Murdoch's News Corp. In 2006, News Corp.'s MySpace social network struck a lucrative advertising partnership with Google that was widely seen as a coup for Levinsohn.

But it's not clear if those past ties will be enough to smooth things over with Levinsohn, who has now been snubbed twice for the Yahoo CEO job in less than a year.

He was also interested in running Yahoo after the company fired Carol Bartz as CEO last September, but didn't even get an interim tryout that time. Yahoo instead relied on Tim Morse, its chief financial officer, as its temporary CEO.

Levinsohn, 48, was widely seen as the leading candidate to be permanent CEO this time. So being passed over for a younger outsider such as Mayer may have bruised his ego.

CHARTING A NEW DIRECTION

Whether Levinsohn stays or leaves, Mayer will have to answer a question that has stumped the four other full-time CEOs that have steered Yahoo during the past five years: Where does Yahoo Inc fit in an Internet and mobile market that is increasingly tilting toward Google Inc, Apple Inc, Facebook Inc and Amazon.com Inc?

As Mayer ponders this one, she is likely to draw on her experience as one of Google's top executives. She probably knows Google's weaknesses, as well its strengths. And her perch at Google may have given her a better vantage point on the potential vulnerabilities at Apple, Facebook and Amazon.com.

Yahoo is trying to build on its monthly audience of 700 million users and develop more effective ways to connect with people on smartphones and mobile devices. Mayer's insights could help identify revenue-generating opportunities where Yahoo has the best chance to succeed.

ATTRACTING TOP TALENT

Once she draws up a coherent strategy, Mayer will need to find the right people to execute on it. That means she will need to recruit elite computer programmers, a breed that has been more inclined to work at Google, Facebook and Apple.

Yahoo's morale suffered another blow in April when Thompson announced plans to lay off 2,000 people, or 14 per cent of the work force.

Mayer's hiring, though, may help reshape the largely negative perceptions of Yahoo on Wall Street and in Silicon Valley. Her track record at Google and her intellect gives her credibility in Silicon Valley, where Yahoo's California headquarters are located.

As she tries to nurture Yahoo, Mayer will be taking on a huge challenge that figures to test her ability to find the right balance between her job and home life. Shortly after the news broke about her move to Yahoo, Mayer announced she is pregnant. The baby boy's due date is in early October, just before Yahoo will be reporting how it fared under Mayer's leadership.