• by Tameka Kee , June 20, 2007

A myriad of suggestions abound for Yahoo's next steps after its CEO shuffle--but technology spending and mergers/acquisition activity are the areas for improvement that are center stage with financial analysts, marketing executives and search specialists alike.

Financial analysts alluded to the move as a long-term strategic positive, one that "pushes Yahoo closer to its tech roots," according to an insider at Banc of America Securities. At Deutsche Bank, the sentiment is that co-founder and new CEO Jerry Yang will allocate more "funds to be spent on research and development"--a strategy that many in the financial sector see as integral to the company's future growth.

"Technology investment feels like a key space they need to move in," said Andrew Goodman, co-founder, Page Zero Media. "Management can repackage and reorganize as much as they want, but growth comes from core technology."

An analyst's note from RBC Capital Markets commented on Yahoo's acknowledgement of an underperforming display ad business, saying that new partnerships with major players such as NewsCorp.'s MySpace will be integral for reversing the tide.

Though new President Sue Decker has been chided for her comment "It's not our goal to be No. 1 in Internet search," some search marketers believe Yahoo can still gain ground in overall search share through a number of well-placed mergers and acquisitions.

"We'd love to see the Panama platform on Microsoft, for example," said Goodman. "And Yahoo had a pretty good deal serving Microsoft, and getting the revenue from Overture." Still, even if a new covenant between the two giants doesn't come to fruition, Yahoo could make great strides by acquiring buzz-generating startup search firms--both for local and mobile offerings.

In the midst of the suggestions, analysts still have questions about how Yahoo will function operationally. For example, speculation exists about collapsing the audience and advertising responsibilities into Decker's role as president, while others wonder whether Decker, seemingly passed up for the CEO role, will even be with the company 12 months from now.

What is clear, however, is that Yahoo's stock prices took a positive bounce after Monday's announcement--a factor that seems to herald renewed industry optimism, if not downright confidence.