By Nadia Damouni and Alexei Oreskovic

SAN FRANCISCO (Reuters) - Marissa Mayer, who earned a reputation for decisive action and intensity during her 13-year stint at Google Inc, has spent her first months as Yahoo Inc CEO quietly moving the Internet pioneer back to its roots in technology.

Long torn between whether it should focus on media content or on tools and technologies, Yahoo under Mayer is being positioned firmly in the latter camp, according to sources inside and outside the company.

Her hires, acquisition musings, and other early moves hint at an ambitious, technology-driven comeback plan designed to revitalize aging but well-trafficked properties such as Yahoo Mail, Yahoo Finance and Yahoo Sports.

Yahoo has been criticized for allowing these sites to stagnate - they look very much like they did five years ago, and do not have many bells and whistles to encourage users to spend more time on them.

Mayer, 37, wants to make Yahoo's properties much more interactive, on PCs and on mobile devices, using social media tools to personalize the user experience and new technology to boost advertising sales. Her well-known focus on user design is expected to result in a simpler, less-cluttered email and home page, one source said.

Yahoo declined to comment for this article. Mayer, who gave birth to her first child weeks ago, will unveil details of her comeback plan when Yahoo reports quarterly results on Monday.

Mayer's focus on technology in many ways reverses a course set by her predecessors, who had concentrated on media content deals, such as those that gave prime billing to Walt Disney Co's ABC News or CNBC, or to bring an original program starring actor Tom Hanks to its website.

The new strategy is not without risks: it positions Yahoo squarely against Facebook Inc and Google. It also risks alienating a large, media-focused contingent that is already weakened by the departure of Ross Levinsohn, who had championed a media-centric approach when he was interim CEO before Mayer's arrival in July.

Mayer has been meeting with Internet gurus including AOL Inc CEO Tim Armstrong, another ex-Googler; Silicon Valley lawyer Larry Sonsini; and Wall Street investment bankers, according to people familiar with the matter.

Bankers have pitched Mayer and her team on a slew of potential acquisitions, and they appeared to show interest in restaurant reservation site OpenTable Inc and advertising technology companies PubMatic, Turn and Millennial Media, one of the people said.

Caterva, a small start-up whose technology analyzes social media activity, has also been in low-level talks with Yahoo, said another source familiar with the situation.

OpenTable and PubMatic declined comment. Millennial Media and Caterva did not respond to requests for comment.

With more than $2 billion in cash and short-term securities, Yahoo has the money to acquire engineering talent or bolt-on services. Two types of deals are under consideration: companies that will increase user engagement, including on mobile, and those that will boost advertising returns, source said.

"What they've signaled so far is that the deals will be more niche in nature, smaller deals that maybe have a lot of promise," said Ken Allen, a director at Blackstone Advisory Partners.

TALENT HUNT

Many industry insiders believe Mayer is Yahoo's final hope for reversing a years-long decline from the pinnacle it once attained as the leading gateway to the Internet. Four of her predecessors have tried in vain to right the ship - Yahoo's market value of $19 billion, is less than half its $44 billion value in 2005.

Mayer, who earned a masters degree in computer science from Stanford University specializing in artificial intelligence, has moved quickly on the personnel front, shelling out rich pay packages to attract ex-colleagues from Google and elsewhere.

She brought in ad technology systems guru Henrique de Castro as chief operating officer; a new finance chief in Ken Goldman, who also has tech chops, to replace Tim Morse; and Jacqueline Reese to assume the dual role of hiring and acquisitions, suggesting the start of a train of "acqui-hires" or buying small companies for their engineering talent.

"She's spending almost all her time with the product folks. She's spending it on technology. She's talking about engineering hires," a person close to Yahoo said about Mayer's early days.

Yahoo's advertising technology products, headed for the auction block before Mayer's arrival, are back in favor. De Castro, her highest-profile hire, is known for a deep-understanding of the complex advertising landscape, where dozens of businesses and technology providers are interlinked.

Mayer has also shown an interest in the company's ad tech platform, including Right Media, an automated exchange that allows marketers to blast ads across a network of websites.

The group has been a long-standing source of division among Yahoo's management, including with Levinsohn, who was keen on divesting the unit, according to two sources close to the matter. But shortly after Mayer's arrival, Yahoo told AdAge that it had no intention of selling Right Media.

Yahoo's advertising salesforce, responsible for signing splashy home-page ad deals and premium marketing campaigns, has received scant attention from the new CEO, say people close to the company. Michael Barrett, Yahoo's chief revenue officer hired by Levinsohn shortly before Mayer's arrival, recently announced his resignation, according to a source familiar with the matter.

FOCUS ON MOBILE

Roughly 700 million users visit a Yahoo website every month - putting it in the top ranks globally. But the amount of activity people engage in on many sites is steadily declining, and its smartphone offerings are deemed lackluster.

"The largest change is to be deadly serious about mobile," said a former Yahoo manager who remains in touch with people at the company.

Yahoo faces tough competition from Facebook and Google, two companies that have taken consumers' time, engineering talent and market value from Yahoo. They are also trying to make the transition to mobile, but it has been difficult.

Some say the direction signaled by Mayer is not so different than strategies espoused by previous CEOs that Yahoo has consistently struggled to implement. A fragmented culture in which short-term finances usually trump product plans is to blame, according to those who know the company.

The recent departure of CFO Tim Morse could signal a change in approach, said several former Yahoo employees.

Morse was considered the force behind Chinese e-commerce company Alibaba Group and Yahoo's $7.6 billion deal over the summer, which saw Yahoo sell about half of its 40 percent stake in Alibaba after years of wrangling over terms.

But now Yahoo's Asian partners, including Yahoo Japan Corp, are not on the front burner for Mayer, one source familiar with the situation said.

Whether Wall Street has the patience for yet another Yahoo revival plan remains to be seen.

"Every CEO needs time to have their full vision articulated and understood," said Dan Rosensweig, a former Yahoo chief operating officer, who now serves as CEO of online textbook rental company Chegg.com. "To count Yahoo out would be an enormous mistake, because the users have not counted Yahoo out," he said. "It's not like MySpace, where all the users went away."

(Reporting By Nadia Damouni in New York and Alexei Oreskovic in San Francisco; Editing by Edwin Chan, Jonathan Weber and Tiffany Wu)

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  • Timothy Morse

    Timothy Morse, Yahoo's interim chief executive and chief financial officer since July 2009. He is likely the backstop candidate to be the company's permanent CEO. Morse had been CFO at chip-maker Altera Corp. and held various financial management roles at General Electric Co. for more than 15 years. He is seen as a strong operator credited with improving operating profits at Yahoo, mainly through cost-cutting, even as revenue at the company fell. His solid financial background and Silicon Valley experience could be an asset if major strategic moves are pursued, although he could be seen as damaged goods because Bartz had hired him.

  • Ross Levinsohn

    Ross Levinsohn, Yahoo's executive vice president for the Americas. Levinsohn joined the company in October 2010 from Fuse Capital, a digital media and communications investment fund that he co-founded and led as managing director. As a strategist, he helped orchestrate News Corp.'s purchase of Myspace in 2005, an acquisition that ultimately failed. He is seen as well connected in the world of new media. "He's probably learned from his mistakes about what he did at Myspace," B. Riley & Co. Inc. analyst Sameet Sinha said. For now, Levinsohn is serving on an executive leadership council that is advising Morse, so it's a short step up to the top job.

  • Jonathan Miller

    Jonathan Miller, News Corp.'s chief digital officer since March 2009. He knows the Web portal business from his stint as AOL's chief executive from 2002 to 2006 and knows Levinsohn from their time co-founding Velocity Interactive Group, which became Fuse Capital. He should be busy trying to sell online video service Hulu, but it helps that Yahoo is one of the bidders. He knows when to cut losses, having helped sell the money-losing Myspace in June. He could also be instrumental to scoping out a Yahoo-AOL merger if the idea resurfaces.

  • Jason Kilar

    Jason Kilar, CEO of Hulu, which is being sold by its owners, News Corp., The Walt Disney Co., Comcast Corp.'s NBCUniversal and Providence Equity Partners. Kilar has helped Hulu become profitable and has innovated unique ad strategies that give viewers choices. He also helped launch the Hulu Plus paid subscription plan. If and when Hulu gets sold, Kilar may be up for a job with larger responsibilities, and he understands the challenges of selling ads online. The Harvard Business School grad also worked as an executive at Amazon.com Inc.

  • David Kenny

    David Kenny, president of online content delivery company Akamai Technologies Inc. Kenny joined Yahoo's board in April. He was chairman and CEO of digital advertising agency Digitas, a unit of ad agency giant Publicis Groupe SA, from 1997 to 2008 so he understands the Web advertising economy. Although he isn't on Yahoo's executive leadership council, he is a member of Yahoo's board and will be involved with major strategic decisions.

  • Tim Armstrong

    Tim Armstrong, CEO of AOL Inc. He could be a candidate, but he runs a competing Web portal that has problems of its own. AOL has been slashing staff and recently bought The Huffington Post to boost its audience. TechCrunch, another recent AOL purchase, may see the departure of its founder Michael Arrington, who is starting up a venture capital firm. Besides needing to reverse losses at AOL, Armstrong has plenty of strategic challenges to overcome before moving on.

  • Peter Chernin

    Peter Chernin, former president and chief operating officer of News Corp. Chernin now runs Chernin Entertainment, which produced "Rise of the Planet of the Apes" for 20th Century Fox, the studio he once oversaw. Although Chernin certainly has operational management skills and vast experience in media, he's got a smash hit on his hands and a possible film franchise to manage. On a positive note, Chernin has looked into possibly taking over Yahoo with other investors, according to the Wall Street Journal's technology blog, All Things D.

  • Jack Ma

    Jack Ma, CEO of China's Alibaba Group. He is the dark horse who could take control of Yahoo and potentially snag the CEO job for himself. Ma has battled Bartz over his decisions and has chafed at Yahoo's 43 percent stake in his prized Internet company. "Jack Ma has not made it a secret that he really wants that stake back," Susquehanna Financial Group analyst Herman Leung said. Alibaba's market capitalization of $27.5 billion dwarfs Yahoo's of about $17.2 billion, making some kind of stock swap purchase possible with the help of private equity funds, Leung said. Ma could buy all of Yahoo to get back the Alibaba stake and sell the rest of the portal "at cost or at a loss," Leung said.