I Prefer a Bold Marissa Mayer

Yes, Yahoo! (YHOO) CEO Marissa Mayer's decision to fire COO Henrique de Castro after only 15-month tenure reveals that Yahoo!'s core business continues to struggle.  

But is this news? No!

Just looking at last quarter, Yahoo! gave its second consecutive guide-down, with both display and search continuing to underperform.

The driver of the recent run is not based on trends for the core business at this point.

The investment case for Yahoo! continues to be Alibaba and Yahoo! Japan. And bears that pointed to the core business issues during this period have missed out on a huge run.

Mayer has the benefit of taking risks in the core business (think: expensive Tumblr acquisition for example), and being brutal at times when it comes to management decisions, because of the Alibaba halo. 

It is difficult for a company to conduct a real turnaround when public, particularly as managers need to be keenly aware of quarterly expectations and overall performance.  Hence why I argued last year that Dell needed to go private to really change.  Hewlett Packard (HPQ), upgraded by Bank of America (BAC) today even after the run, is finally making its transition work, but it went through a lot of pain before we saw some traction.

Mayer is making the move she needs to make, while protected by the Alibaba halo, so that she can make real changes in the core business--will eventually (but not yet!) be important for stock performance.

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