What’s Next for Yahoo?

Yahoo (NASDAQ:YHOO) will release its fourth-quarter earnings on Monday after the markets close, and analysts are expecting the report to round off a fourth consecutive year of decreasing revenue. Expectations are that revenue will drop about 10 percent for the year to $4.6 billion as the company continues to lose advertising dollars to competitors like Google (NASDAQ:GOOG) and Facebook (NASDAQ:FB).

Yahoo has been in turn-around mode for a few years, and CEO Marissa Mayer has finally been at the company long enough to not be referred to as the new boss. Mayer, who was the 20th employee at Google and remained at the company until she left for Yahoo, has been CEO since July. Suffering just one significant sell-off in August, the company’s stock has come up 33 percent under her leadership to about $20 per share on Friday ahead of the earnings. Before this, shares had been trapped in a range between $14 and $17 ever since the financial crisis.

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So far, it seems like Mayer’s strategy has been to tighten up all the loose bolts and sweep the skeletons out of the closet. The company has been accused of failing to innovate, of failing to foster talent, and of just generally neglecting its services. Some services like Groups haven’t been updated in a decade. Yahoo is still the fourth-most visited website in the U.S. and the world, but without frequent product updates, traffic could dry up. Yahoo’s reach has fallen slightly over the past two years.

As to what’s next for Yahoo, Mayer has made it abundantly clear: personalization, and mobile. She gives off the impression that Yahoo will become more than just a directory and more than just a gateway to the Internet. The company will seek to understand users and relentlessly offer them what they want, within the context of the Internet.

“Whenever you’re dealing with a daily habit, and really providing a lot of value around it, there’s opportunity not only to provide that value to the user, but also to create a great business,” said Mayer in an interview with Bloomberg. Speaking from Davos, Switzerland, where the World Economic Forum has convened for its annual meeting, Mayer suggested that the new Yahoo will be like the old Yahoo: a pioneer.

Yahoo has no mobile hardware of its own. It doesn’t have an operating system or a browser either, and compared to Facebook it is not a social network. The jury is out, and these are the hallmarks of a top tech company. So what’s Yahoo to do?

The answer, as indicated by Mayer, is to enhance the user experience independent of the hardware. It’s to find a way to leverage information — such as search queries, location, and social data — in a unique way. Yahoo wants to be the platform that supports people’s daily habits: reading the news, checking stock quotes, looking up sports scores, checking email, or sharing something.

Mayer’s vision is for a service that doesn’t replace search, but becomes a critical part of it. In the interview with Bloomberg, she suggested that down the line, queries will be individualized. Two people searching for the same thing would yield different results based on their browsing histories, where they are, and their social connections. Ideally, this difference would produce unique value for the user.

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