Microsoft search deal hasn't worked out as Mayer hoped

Yahoo's CEO says the partnership has yet to deliver the increased revenue or market share that was expected.

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Steven Musil
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Marissa Mayer
Marissa Mayer James Martin/CNET

Marissa Mayer is not yet impressed by Yahoo's search partnership with Microsoft.

In her first investor conference appearance since taking over as Yahoo's chief executive last summer, Mayer told attendees at the 2013 Goldman Sachs Technology and Internet Conference in San Francisco that the pact is not delivering the increased revenue or market share that was expected.

"One of the points of the alliance is that we collectively want to grow share rather than just trading share with each other," said Mayer, according to a Reuters account of the event. "I'm not confused. Our biggest business problem right now is impressions."

The two companies entered into a 10-year search partnership in 2010 in which Microsoft would power Yahoo search and Yahoo would become the sales force for Microsoft's premium properties. Once the partnership was fully operational, Yahoo said it expected the deal would boost its annual operating income by about $500 million, while reducing capital expenditure by $200 million

The struggling company's fiscal 2012 performance resulted in Yahoo's first full-year revenue gain since 2008, though it was only $2.4 million more than the previous year's nearly $5 billion

"We need to see monetization working better, because we know that it can and we've seen other competitors in the space illustrate how well it can work," Mayer said of the search deal with Microsoft.

Saying that the company would focus on providing expanded personalized user experiences both on mobile and the desktop, Mayer acknowledged that there will need to be some trimming too, especially when it comes to mobile.

Yahoo currently has "a scattered product portfolio" with "somewhere between 60 and 75 mobile apps," she said, adding that her goal is to narrow that portfolio down to just 12 to 15 apps.