A new focus on innovation and core products is needed for new CEO Marissa Mayer to turn around Yahoo, analysts say.
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A new focus on innovation and core products is needed for new CEO Marissa Mayer to turn around Yahoo, analysts say.

Story highlights

Analysts break down what Yahoo needs to do to turn its business around

The key is defining what Yahoo is and stripping away what it's not

Analysts say the company needs more innovation, which has been lacking

Google alum Marissa Mayer has been named Yahoo's new CEO

CNN —  

In the wake of Google alum Marissa Mayer’s surprise hiring as CEO, variations of the same question are popping up again and again:

What can be done to turn once-mighty Yahoo around?

In the salad days of the late ‘90s and early 2000s, Yahoo was the very face of the Internet for many people. Its search engine was the Web’s most-used, letting the company demand top dollars for advertising. As a Web portal, it helped hundreds of million of people take their first tentative steps online.

Opinion: What signal is Marissa Mayer giving to Yahoo employees?

But along came a company called Google, whose algorithm-based search feature came to dominate the market quickly and whose e-mail service, while not supplanting Yahoo’s, played a part in stripping away the company’s fading sheen of Internet chic.

Yahoo’s stock price spiraled to $118.75 in early 2000. That number sat at $15.62 Wednesday morning, about three months after the company laid off 2,000 workers.

The once-dominant photo site, Yahoo-owned Flickr, has been increasingly shoved aside in favor of mobile apps such as Instagram and blogging sites such as Tumblr. And even online advertising, which Yahoo once dominated, is slumping. Yahoo’s ad revenue has been passed by both Google and Facebook, and its overall share of online ad sales in the United States has been cut in half since 2009.

The company has churned through four CEOs in four years. And the last, Scott Thompson, left in May after he was discovered to have padded his resume with college credentials he didn’t really earn.

So what’s to be done?

Defining Yahoo

Analysts say the Sunnyvale, California, company needs to start by deciding what it is.

Take a quick look at this list of product