RBC's Mark Mahaney On What Yahoo! Needs To Make A Turnaround

It seems that Yahoo! Inc. YHOO is trying its best to make a turnaround, but as the recent quarterly results show, it is just not able to.

Mark Mahaney, RBC Capital Markets, was on CNBC recently to discuss what Yahoo! needs to do if it needs to again be an Internet Major.

Not A Lot Of Room

“On the fundamental side the issue for Yahoo is what’s going to happen tonight in the report from Facebook which is that Facebook is generating 4 times as much revenue as Yahoo!,” Mahney said. “Google is generating 16 times as much revenue as Yahoo! that doesn’t leave Yahoo! a lot of room to manuvere within the space. Of all the commentary that occurred earlier the one additional point I’d make is Yahoo! has to seriously consider a transformative acquisition.”

Need For Transformative Acquisitions

Mahaney was asked should investors expect Yahoo! to ever turn into a Google or Facebook or will the company have a different story. He replied, “Well the stock has underperformed year-to-date, but over the last couple of years this has been a great performing stock as they played their hand really well [that is] very valuable assets is Asia and they have gone through the process of selling off those assets at great prices.”

“So, kudos to them and they have also been very shareholder friendly in terms of repurchasing stock. So, its been a very different story than what Google’s has been and a great value story. However, once you leave that realm, we are going to leave that realm once these assets are spun off, Yahoo! Japan and Alibaba the question is – what’s left?"

“And there what’s left is far, far from being anything Google [is]. And then what do you do, you think probably the best feature for that, step for that asset right there is some sort of transformative acquisition,” Mahaney concluded.