Yahoo's Marissa Mayer outlines reorg to hike ad sales

Jon Swartz | USA TODAY

Show Caption Hide Caption Marissa Mayer crows about Tumblr's growth Marissa Mayer told investors and analysts at a Goldman Sachs conference that Yahoo's Tumblr has 460 million users, making it the fastest-growing social network. Laura Mandaro reports.

SAN FRANCISCO — A day after Apple CEO Tim Cook made headlines in an open Q&A session at a major investor summit here, expectations were high that Yahoo CEO Marissa Mayer would do the same.

But in an interview closed to the press, Mayer disappointed. By offering slim pickings, she sounded more like a CEO under siege than one who is on track to lift Yahoo out of the doldrums.

At the Goldman Sachs Technology and Internet Conference on Wednesday, Mayer outlined a reorganization to jump-start the company's stagnant advertising business, gave a status report on the acquisition of Tumblr and touched on its relationships with Microsoft and Alibaba.

"We feel good about where we are in the (advertising) ecosystem," Mayer said in an audio broadcast of her 30-minute sit-down interview. She said Prashant Fuloria, an Internet product manager who joined Yahoo last year when it bought mobile-ad start-up Flurry, will oversee all ad products at Yahoo.

Yahoo is being pinched on several advertising fronts: Its core business is under siege from automated software from the likes of Google; Facebook, Twitter and Google's YouTube are gobbling up mobile video ads; and it faces competition for the so-called "programmatic" ad market.

When she signed on, Mayer inherited mission:impossible — return Yahoo to relevance amid a competitive onslaught from Google and Facebook. And, to a certain degree, she made strides with astute acquisitions and re-fashioned products in markets for mobile devices.

Revenue from the businesses Mayer created or acquired is growing at an annual rate of 80%, and she expects overall growth to begin this year — in line with her original timeline when she took over Yahoo in mid-2012. (Yahoo has not reported a year of revenue growth since 2008.)

One of Yahoo's key acquisitions — the $1 billion purchase of micro-blogging service Tumblr — has paid dividends, Mayer said Wednesday. Combined with Yahoo, it reaches 1 billion users, half of them on mobile devices, she said. At 460 million users, Tumblr is also the fastest-growing social network, eclipsing Instagram, Mayer said. It is expected to haul in $100 million in revenue this year.

Mayer has been scrutinized, dissected and over-analyzed since she became Yahoo CEO.

A pack of ravenous activist investors is pressing Mayer to ditch her strategy and, instead, slash costs, eschew acquisitions and consider merging with AOL. In short, they want her exit.

Mayer leveraged the financial might of Alibaba — which pulled off the largest U.S. IPO ever in September — as a glorified ATM to snap up start-ups Tumblr, Flurry and BrightRoll. She's also invested heavily in Yahoo's mobile apps and original online content.

Mayer's detractors prefer she leave alone the Alibaba investment and return its proceeds to shareholders.

Taxes on Alibaba alone are bigger than Yahoo Japan, Mayer said, so Yahoo is focusing on spinning off Alibaba first. She expects that to happen by the end of the year.

Mayer added Yahoo is working with Microsoft on how to change its search deal, which is not exclusively mobile.

She promised new products at Yahoo's first-ever mobile developers conference here next week.

Mayer's comments came a day after Cook announced Apple has formed a partnership with First Solar to build an $848 million, 1,300-acre solar farm in Monterey County, Calif. The company, which became the first to surpass $700 billion in market value on Tuesday, is also expanding aggressively in China and India.

Here's a recap of the live updates.