Marissa Mayer has sat behind the wheel at Yahoo for nearly four years. She has had the luxury of running one of the world’s most recognized internet brands, with a surging digital ad market, a cooperative board, a truckload of cash and 1 billion monthly visitors. And still she has failed to turn things around at the beleaguered company.

“Befuddlement is the best way I could characterize Marissa Mayer’s hire,” says Brian Wieser, senior analyst at Pivotal Research Group, of the onetime Google wunderkind’s arrival at Yahoo in July 2012. “Sure, you had someone who understood consumer use of digital media — but no core experience with Yahoo’s business, which was generating ad revenue from Madison Avenue.”

Marco Ventura for Variety

Mayer, who will be 41 on May 30, now faces the prospect of the firm she was hired to save being sold off, and the possibility of being booted from her job. She has been largely protected from Wall Street’s wrath by the surge in value from Yahoo’s Alibaba Group holdings (although she had nothing to do with those gains). But as Yahoo’s finances have continued to deteriorate, it has become apparent that Mayer has wasted time and money with a lack of cohesive vision and a mercurial micromanagement style that paralyzed growth opportunities, according to former employees and industry execs.

As one shareholder wonders: “What the f— has Marissa Mayer been doing for the last three-plus years?”

When Yahoo hired Mayer, the company was in a position to become a real player in social media, and to blossom into a much bigger digital-media property that could leverage increased revenue from its huge audience. Instead, Mayer spent $1 billion on blogging startup Tumblr, which three years later hasn’t produced any meaningful revenue, while unilaterally abandoning an array of content initiatives.

In turn, she has doubled down on search, which Yahoo is fueling with pricey paid-traffic deals with two of its biggest rivals, 
Microsoft and Google. But prior to Mayer deciding it was critical to Yahoo’s future, web search hadn’t been a strength since the company’s earliest days. “Let’s not be hyperbolic: The use case was literally accidental searches on the homepage,” says a former Yahoo exec.

Mayer’s interest in beefing up search, according to this source, is because “she has a real chip on her shoulder about getting thrown out of search” at Google. (In 2010, she was demoted by then-CEO Eric Schmidt from her position as Google VP of search products and user experience to a job overseeing local content, maps, and location services.)

“The Yahoo way is, ‘We’ll throw 10 rocks against the wall, and maybe one of them will hit the bull’s-eye. But you need a sniper rifle in this business.”
Rich Tullo, analyst

Now Yahoo investors waiting for Mayer’s turnaround miracle to materialize have thrown up their hands. Activist/investor Starboard Value — exasperated at the lack of progress on Mayer’s watch — threatened to oust the CEO and the current board by nominating its own slate of directors. Last month, Yahoo averted a potentially ugly proxy fight with the fund by appointing Starboard chief Jeffrey Smith and three Starboard-backed directors to the board. The shakeup increases the likelihood of a Yahoo sale, given Starboard’s position on the issue. For now, 
Mayer’s job at the company appears safe, but all bets are off if the new board finds a buyer. (In the event she’s fired within a year of an acquisition, Mayer stands to receive a severance package worth about $55 million.)

Mayer, through a rep, declined a request for an interview.

At this point, the task of trying to revive Yahoo will almost certainly fall to an acquirer or a new management team. Earlier this year, the company’s board bowed to pressure to put itself on the block, and Yahoo is reviewing bids from parties including Verizon and several private-equity firms, while billionaire Warren Buffett says he’s willing to back a play for the company by his friend Dan Gilbert, founder of Quicken Loans. Verizon, which snapped up AOL for $4.4 billion a year ago, is widely seen as the top candidate among potential strategic buyers, and would almost certainly merge Yahoo and AOL.

A Wall Street Journal report last week said Verizon and other bidders planned to offer between $2 billion and $3 billion for Yahoo — far less than the $8 billion or more the company has been expecting.

So Mayer’s legacy at Yahoo may be as the CEO who drove it into a fire sale. “You’d think Verizon would be interested in it just for their traffic, and fire everybody in a classic strategic-acquirer move to take cost synergies out,” says Brett Harriss, media and entertainment analyst at Gabelli & Co.

No one can accuse Mayer of standing still. Under her leadership, Yahoo has bought some 50 companies for a total of $2.8 billion, per an estimate by investor Eric Jackson of 
SpringOwl Asset Management. Many of those deals are smaller acqui-hires — buys of companies for their staff, not the products they sell — in the mobile space.

Analysts criticize the approach as a scattershot strategy that has failed to move the needle. “The Yahoo way is, ‘We’ll throw 10 rocks against the wall, and maybe one of them will hit the bull’s-eye,’ ” says Rich Tullo, analyst with Albert Fried & Co. “But you need a sniper rifle in this business.”

Marco Ventura for Variety

Mayer has touted growth of Yahoo’s so-called “Mavens” business, comprising mobile, video, native, and social ads. That segment represented $390 million in revenue in the first quarter of 2016, up 7% year-over-year, with mobile ads up 11% to $250 million, and a global mobile audience of 600 million monthly users.

“Over the past three and a half years, we took a company that, despite its rich history, faced legacy revenue declines, and we forged a Yahoo that is stronger and more modern,” Mayer said on the company’s first-quarter earnings call in April.

But so far, Mavens has not stopped the bleeding at Yahoo. The company is projecting 2016 revenue, excluding traffic-acquisition costs, to decline by as much as 17%, to between $3.4 billion and $3.6 billion; and adjusted profits before depreciation, taxes, and amortization to drop by as much as 26%, to $700 million to $800 million.

“Mobile was something Yahoo had to go after,” says Scott Kessler, equity analyst at S&P Global Market Intelligence. “The problem is, after all the M&A, people asked, ‘Are these actions really going to enhance the company’s growth profile?’ What became apparent was that they didn’t.”

Both search and display ad revenue for Yahoo will drop by double-digit percentages this year — even as heavyweights like Google and Facebook continue to punch up sales 
in the growing sectors, according to research firm eMarketer.

Tumblr has been a particular disappointment for Yahoo. “It’s a hipster-porn platform, essentially,” says Tullo. “Why isn’t it Pinterest or Instagram?” Tumblr will contribute just $25 million in operating income to Yahoo’s bottom line on $80 million in revenue in 2016, according to analyst firm SunTrust.

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Reflecting Mayer’s poor track record of deal-making, in the fourth quarter of 2015, Yahoo recorded goodwill impairment charges of $1.2 billion related to acquisitions since 2012. That included a $230 million write-down for Tumblr. Yahoo said in an SEC filing that it is “reasonably possible” it could write down all of the remaining goodwill associated with Tumblr.

One acquisition that does seem to have helped is Yahoo’s $640 million purchase of programmatic video-ad platform BrightRoll in November 2014. Yet that contributed only “incremental revenue” for full-year 2015, the company said in a filing, and Yahoo’s need to enhance its ad-tech capabilities was already long overdue by then.

On the media front, Mayer has simply been out of her depth, insiders say.

She came to Yahoo boasting Silicon Valley chops — she was Google’s first female engineer — but she has never had a real understanding of the media business, they say.

“She believes she can figure it out on her own,” says a former top Yahoo exec. “Her attitude is, ‘I watch TV shows, so I know TV shows.’” Mayer hired Katie Couric — in a deal reportedly worth up to $10 million per year, mostly in stock — because she personally likes the former TV news personality, without a sense of where and how Couric’s brand would appeal to Yahoo’s user base, according to this source.

At first, Mayer was gung-ho on expanding Yahoo’s media business, particularly in video entertainment, approving a Netflix-like slate of scripted original series with a seven-year business plan to recoup the investment (although the company had not yet acquired rights to the content over that time period). Last fall, Yahoo became the first internet outlet to live-stream an NFL game exclusively online, attracting 15 million viewers who watched some portion of it. (It’s unclear what the average audience was for the one-off.)

Even earlier, in 2013, Yahoo was among the bidders for Hulu before that company’s media-conglomerate owners decided not to move forward with the sales process. Yahoo also envisioned competing with Google’s 
YouTube, making a $200 million offer for the French user-generated video site Dailymotion, since acquired by Vivendi. Execs later floated a pitch to YouTube creators — one that never went anywhere — to take their shows exclusively to Yahoo.

The plan at Yahoo was to launch a major standalone video service once content deals hit critical mass. But Mayer bailed on the strategy when the company’s financials kept faltering; continuing on the path would have required Yahoo to invest even more in video without clear near-term payback. “She got enamored with content — but she had zero expertise. And she hired people with even less experience,” says one media exec who has had dealings with Yahoo.

Mayer pitched Yahoo to mobile content developers last year at a company-sponsored confab in San Francisco. Yahoo mobile ads were up 11% in Q1. AP Photo/Eric Risberg

Yahoo formally exited TV-style entertainment in the third quarter of 2015, taking a $42 million write-down on original series, including its revival of “Community,” previously axed by NBC. Also left stranded were Simon Cowell’s live DJ reality-competition series and “The Pursuit,” a twentysomething comedy à la “Friends” from exec producer Scott Stuber, for which it had signed production deals. The company later shut down its Yahoo Screen video division, which was a hub for all its licensed and original video content.

Among the problems with Yahoo Screen was that it delivered a subpar user experience — it was clunky, and users couldn’t easily find what they wanted to watch. Moreover, say industry execs, the company has ineffectively marketed its video lineup, which currently includes live concerts from Live Nation Entertainment (a deal that runs through July 2016).

“Yahoo’s massive audience, which still exists today, gave it a tremendous media opportunity,” says Peter Csathy, CEO of Manatt Digital Media, a business consulting and legal services firm. “They had all this promise, they had all the core assets they needed to succeed — with a great sales force — and it’s no secret that they’ve dropped the ball.”

In another content retrenchment, Yahoo in February folded seven digital magazines, including titles covering food and travel, which had been a Mayer pet project. She wanted to launch dozens of vertically oriented magazines, dictating that they use Tumblr-based designs, hoping to better monetize Yahoo’s monthly audience.

Mayer has positioned those closures as a refocusing on Yahoo’s four strongest content segments — news, sports, finance, and lifestyle — as the company aims to cut 15% of its workforce over the course of 2016. But those were the areas on which Yahoo should have stayed laser-focused all along, according to S&P’s Kessler. “They took their eye off the ball when it comes to content,” he says, adding, “It’s amazing how little investment seems to be allocated to Yahoo Finance. The functionality is not very different than it was 10 years ago.”

Yahoo says that under the revamped media strategy, it’s expanding its video production and reach. In the U.S., time spent watching videos on Yahoo in the first quarter climbed 94% year-over-year, according to the company. Video production has increased 54% as the company has shifted from acquiring video to concentrating more on in-house production, says Yahoo editor-in-chief Martha Nelson, the former Time Inc. top editorial exec Mayer hired last fall to oversee content operations.

“Yahoo is doing plenty of original video. We’re just not doing scripted entertainment today,” Nelson says. “We are focusing on our core verticals and our most engaged audiences.”

“Befuddlement is the best way I could characterize Marissa Mayer’s hire. You had someone who understood consumer use of digital media — but no core experience with Yahoo’s business.”
Brian Wieser, analyst

In February, Yahoo video sites attracted 58.2 million unique visitors in the U.S., making it the third most popular video destination after YouTube and Facebook, according to comScore. Yahoo’s live content includes NHL games in a pact that runs through the league’s 2017-18 regular season, and daily webcasts of 180 MLB games this season on Yahoo Sports. It’s also touting Yahoo News video coverage of the 2016 elections. Yahoo has scored three recent interviews with President Obama, conducted by political columnist Matt Bai (formerly with The New York Times), White House reporter Olivier Knox, and Yahoo Finance markets correspondent Nicole Sinclair. “This is the stuff that keeps good journalists excited and motivated,” Nelson points out.

The company says Couric, who is Yahoo News’ global anchor, has grown increasingly popular. Views of her video reports more than doubled in 2015 from the prior year. Couric’s dispatches generated 157 million views in the first quarter of 2016, as she has spoken with almost all of the U.S. presidential candidates.

“Yahoo has a massive audience and the flexibility to do various forms of interviews,” Couric says. “We can ride the campaign bus with John Kasich, walk the streets of New York with the ladies of ‘Broad City,’ or head behind the scenes with the cast of ‘Hamilton.’”

After more than three decades on TV, Couric now finds television “a very passive medium compared to digital,” and says it has been rewarding to delve deep with her Yahoo interview subjects. “Television programming can often be on while you get ready for work or cook dinner. It’s sometimes white noise in the background of a room,” she notes. “Online and mobile video is never really like that — it’s a very active choice to click and watch a video … and we have to work hard to hold their attention and get them to take the action of clicking on our videos.”

Yahoo still has audience scale on its owned-and-operated sites, which makes them potentially attractive advertising partners, according to Jon Hsia, head of digital investment for agency GroupM. But, Hsia says, “there have been significant headwinds against them in the past couple of years … and they’ve had a hard time monetizing what should be pretty dependable content.”

On May 4, Yahoo hosted a private Digital Content NewFronts event at its New York sales office for brand and agency partners — downsized from its party-atmosphere events in years past. This year, chief revenue officer Lisa Utzschneider says, “we believe it’s important to provide our advertisers with less flash and more substance.” In other words, the company wants to convince big brand marketers it is still in the video game — just without the Hollywood ambitions.

Some observers questioned Mayer’s hiring right from the start. She, in turn, has emphasized the major task she faced to turn Yahoo’s fortunes around, especially given the management upheaval at the company; she was the seventh CEO in a little over five years. “I came in, I thought, ‘Wow, this is even harder than we thought it would be,’” Mayer said on “Charlie Rose” in March.

Views of Katie Couric’s video reports have surged, thanks to interviews with the likes of Speaker of the House Paul Ryan. Courtesy of Yahoo News

But even assuming she had eventually formulated a cohesive, workable strategy to rebuild Yahoo, she is hampered by her tendency to require that virtually all decisions — even small details — be run past her, according to former employees. “Marissa is one of those people who’s always certain she’s right,” says a former Yahoo senior manager. “She would undermine us, change her mind, or make everything go through her at the end of the day. It was a nightmare.”

Says another: “There’s a uniform, recurring theme of bureaucracy in too many layers. Nobody was ever fully empowered.” When she was at Google, Mayer oversaw the approval of each daily homepage “doodle.”

Others say Mayer refuses to admit her failures, a stick-to-her-guns hubris that has made Yahoo slow to correct course when things weren’t working. Asked by Rose about why Yahoo’s series of acquisitions haven’t paid off, she replied, “I actually think they did work. I think that it really was a matter of, we needed to rebuild some of the talent base.” She even defended the Tumblr deal, saying, “Obviously, we have fallen slightly behind where we hoped to be in terms of our plans, but I’m still very optimistic about Tumblr.”

To her credit, Mayer has focused attention on Yahoo’s technology platforms and capabilities around advertising systems, Kessler says. But that only fulfills its potential when you have great content, advertisers, and users. “It’s like you’ve built some great new bridge, but no one uses it,” he says. “Maybe they don’t even know it’s there.”

Martha Nelson, for one, dismisses the chatter surrounding Mayer as something that goes with the territory for a CEO at a high-profile company. “I really admire a lot things about Marissa,” Nelson says about her boss. “She’s obviously bright, super hardworking — she probably works harder than anyone else in the organization. Marissa has devoted herself to transforming Yahoo.”

Fairly or not, Mayer also has been singled out for what detractors see as inappropriately self-indulgent behavior. That includes her infamous August 2013 Vogue photo spread, in which she posed reclining on a chaise lounge and discussed her work attire. “It was a nice photo,” Mayer told Rose after the piece caused a stir. On the company’s February call with investors, she took time to complain about reports alleging that Yahoo paid $450 million on free food for employees over four years and $7 million for a holiday party. “Both numbers are exaggerated by more than a factor of three,” she said, adding, “All of our employee perks are standard for our industry, in line with other companies in our area.”

What happens next? The idea behind the possible Verizon buy is that the telco — which has been amassing a portfolio of digital-media holdings anchored by AOL — would fold Yahoo into a mix headed by AOL CEO Tim Armstrong, who has had success integrating multiple acquisitions at AOL. And there are other reported bidders for Yahoo, including private-equity firm TPG; a consortium that includes Bain Capital, Vista Equity Partners, and Ross Levinsohn, the media exec who served as Yahoo’s interim CEO for less than three months in 2012 before Mayer was hired; and YP Holdings, the AT&T-backed ad company formerly known as Last week, Buffett said Berkshire Hathaway would be a potential financing partner for Gilbert’s bid, confirming reports of the duo’s interest.

On the earnings call in April, Mayer said the Yahoo board and management is making the sales process a “top priority,” often holding several calls and meetings per day. “We have been responsive and engaging,” she claimed.

Whatever the outcome, one ex-Yahoo senior manager has found the company’s travails difficult to witness. “I don’t feel vindicated,” the exec says. “I just feel sad to watch something that had so much potential in a death spiral.”

*Based on five times multiple of Yahoo’s expected 2016 earnings before interest, tax, depreciation, and amortization, plus estimated value of Tumblr.
†Excluding discounts related to tax and liquidity issues
Sources: Company reports, SunTrust, Envision IP, S&P Global Market Intelligence, Morgan Stanley