Purple reign

Now comes the hard part for Marissa Mayer

Marissa Mayer could be forgiven a full-throated "Yahoo!" on the occasion of her first anniversary as chief executive. Her special brand of geek chic helped revive investor enthusiasm toward the wayward $30 billion internet company. As second-quarter figures released on Tuesday show, however, Yahoo!'s salient financial measures haven't improved during Mayer's stewardship. The honeymoon is officially over.

The new boss punctuated her arrival a couple of months ago with the $1.1 billion acquisition of low-revenue blogging site Tumblr. The deal, one of more than a dozen spearheaded by Mayer, underscored the relatively novel idea that entrepreneurs and engineers alike might once again be happy to reside under the purple dome. Mayer's efforts to inject new life at Yahoo! with initiatives like free food, more face-to-face employee encounters and more generous parental leave seem to have had the intended effect on employee morale.

The market has been just as re-energized as Yahoo!'s workforce, for now justifying Mayer's whopping $70 million payday. After years of broadly moving sideways under five previous CEOs in five years, Yahoo! shares have shot up some 70 per cent over the last 12 months, outpacing even those of Mayer's former employer, Google.

For all that, the original Chief Yahoo is as much responsible as Mayer. Expectations of a market debut for Chinese web group Alibaba, in which Yahoo! co-founder Jerry Yang acquired a stake for the company years ago, with a potentially 12-figure valuation underpin much of Yahoo!'s own extra stock value. Yahoo! also owns a 35 per cent stake in Yahoo! Japan, whose shares have doubled over the past year thanks in part to Prime Minister Shinzo Abe's money-printing bonanza. Factors more directly under Mayer's control have continued to falter. In the second quarter, adjusted Ebitda declined by seven per cent from a year ago. Revenue generated from display advertising, the number of ads sold and the price-per-ad all fell. So did search-related revenue, even as the number of paid clicks grew. Mayer acknowledged when she started in the job that turning things around would take a while. At least she must be aware that now comes the hard part.