NEW YORK (TheStreet) -- Any new CEO builds credibility with investors by the moves they make early in his/her tenure. If the company's operating results or acquisitions are wise in the early-going, investors tend to be happy and hands-off when it comes to the CEO making their subsequent moves.

When the early moves are seen quickly as mistakes, investors tend to be unhappy and a lot less forgiving with future moves that CEO wants to make.

Yahoo! (YHOO) CEO Marissa Mayer has had a disappointing first two years on the job at Yahoo!. The company's operating results have been steadily deteriorating under her watch. Capital IQ estimates for Yahoo!'s revenue and EBITDA have been consistently cut by analysts this year.

Her big strategic acquisition to date has been Tumblr, for which she paid $1.1 billion. According to the reporting of Nicholas Carlson at Business Insider, Yahoo! entered into a 30-day period of exclusive talks with Tumblr before it bought them. Yahoo! made an initial offer to Tumblr's financial advisers, Qatalyst (headed by Frank Quattrone), to buy the company for $800 million. Even though Yahoo! and Tumblr were in exclusive talks, Carlson reported that Mayer heard that Facebook's (FB) Sheryl Sandberg was also interested in Tumblr and decided to outbid her original offer by raising it to $1.1 billion cash.

When asked about Tumblr at the Merrill Lynch conference in June, Yahoo! CFO, Ken Goldman, said "Tumblr was a company that wasn't for sale first at all." That's a confusing statement, since Tumblr had hired Qatalyst to shop itself  for a buyer. Several people I have also spoken with subsequent to the deal have told me that, at the time Tumblr put itself on the block, it had less than $5 million in the bank -- and no obvious suitors. Yet, Yahoo! ponied up more than a billion in cash.

One analyst at the Merrill conference put it this way to Goldman:

"Fairly or unfairly, people are going to use Tumblr as a gauge of how your acquisition strategy is working out. Do you have any updates on how Tumblr's doing and how enthusiastic you are on it helping to grow revenues over the next couple of years?"

Goldman's response was "I actually feel great about it," but he refused to provide any numbers of what Tumblr was doing or planned to do for Yahoo!.

Yahoo!'s investors don't feel great about it. At the current stock price, the core Yahoo! business is basically valued at zero. This means investors believe all $2 billion spent by Mayer and Goldman on M&A has been wasted and is unlikely to be recouped.

On the most recent Yahoo! earnings call in July, Mayer presented another disastrous set of results for the core business. She tried to deflect investor anger by pointing out that, prior to her arrival two years ago, Yahoo! lacked "a clear vision for the future and some of the key fundamentals to build a vibrant growth business. Today, [Yahoo!'s] ability to focus and execute has led to some dramatic and critical changes." She then went on to discuss the growth of the mobile user base.

It's interesting that she implied that Ross Levinsohn had no vision for Yahoo! -- which isn't true, of course; he had a media vision for Yahoo!, which the board at the time opted against -- and that they do now. However, she never says Yahoo! has a vision now.

That's a big problem I have with Marissa Mayer as a leader of Yahoo!: What exactly is her vision for the company and what will lit ook like in 5 years? I know it involves mobile and daily habits but that's it.

How exactly does Tumblr fit into that vision? Is it to be a new CMS system to replace Yahoo!'s dozens of existing CMS systems? Did you really need to pay a billion dollars for that?

In a couple of weeks from now, Alibaba (BABA) is going to IPO and Yahoo! will have $9 billion in cash sitting on its balance sheet. What will Mayer do with it?

Yahoo! came out on the last earnings call in July and claimed that it would spend "at least half" of its IPO proceeds on buying back Yahoo! stock. It hoped it would calm investors' nerves. It didn't.

Investors treated the news as a sign that it would be spending at least half of its proceeds on dumb M&A.

Recently, Priceline (PCLN) bought OpenTable (OPEN) for $2.5 billion. The deal itself got a lot of attention but less attention was paid to an SEC filing from June 25, which revealed that there were eight other companies in the running to buy OpenTable.

Among the bidders was a mysterious "Party 4," which was willing to pay $95/share or $2.25 billion. They just got outbid by Priceline. Many Yahoo! investors are worried that Yahoo! might have been Party 4.

Here are the details of Party 4's interest according to the filing:

  • On April 30, senior executives from Party 4 called representatives of Qatalyst (the same Qatalyst that advised Tumblr on selling to Yahoo!) to explore next steps with regards to acquiring OpenTable.
  • Party 4's management met with OpenTable management on May 7.
  • On May 9 __ unknown to Party 4 -- Priceline submitted an offer to buy OpenTable for $95 - $105/share.
  • On May 20, an executive from Party 4 told OpenTable they were still interested in talking about a deal.
  • On May 23, Party 4 submitted a bid for OpenTable of $80 - $85/share, but wanted an exclusivity period of 30 days (which Yahoo! asked for and received when they bid for Tumblr because there were no other bidders)
  • On May 27, Qatalyst told Party 4 they needed to up their offer or they'd be outbid
  • Priceline submitted its final offer to buy OpenTable for $103/share
  • On June 3, Party 4 said they were willing to pay $85/share, but needed a period of exclusivity of 21 days.
  • On June 4, Qatalyst told Party 4 its offer wasn't compelling.
  • On June 5, Party 4 offered $92/share for OpenTable but wanted a period of exclusivity of 7 days.
  • On June 8, Party 4 indicated to Qatalyst they might be willing to raise their offer to $95/share.
  • On June 13, OpenTable and PriceLine announced their merger via a press release.

We don't know for certain if Yahoo! was Party 4, but it hasn't denied it. And being so slow in responding with requests for periods of exclusivity sounds like Yahoo! to me.

If Yahoo! was willing to drop $2.2 billion in cash on OpenTable, it would have taken its cash balances down to $1 billion in net cash, even though it's previously said many times it needs to hold $3 billion in cash to run its business.

But, more importantly, it raises the question for investors: What, again, is the vision for Yahoo!? Mayer and Goldman -- as well as the Yahoo! board -- were seemingly happy to part with $4.2 billion in cash for Tumblr, dozens of unknown acquisitions and probably OpenTable. How exactly do they all stitch together?

I like OpenTable as a company, but I struggle to understand the fit between Tumblr and OpenTable -- and Katie Couric for that matter.

This isn't a vision. This is throw a bunch of money at the wall and see what sticks.

So, how can any Yahoo! investor be reasonably comforted by Yahoo! management that they won't waste the Alibaba cash?

I don't know who exactly Mayer will use Yahoo!'s shareholders money to buy next, but I have a strong suspicion it will be a Qatalyst client.

At the time of publication, the author was long YHOO, although positions may change at any time.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

TheStreet Ratings team rates YAHOO INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate YAHOO INC (YHOO) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, solid stock price performance, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."