It happened again. Yahoo! made a change to its system, and everybody freaked out.

Last week, the company revamped its email interface to complement the continuing internal edits being made to its system. The email change so deeply enraged some users that a petition has been created to change the system back to the way it was originally.

Not even two months earlier, the online masses raged over Yahoo! for a different reason: its new, slimmed-down logo, which the company had changed for the first time in its 18-year history, was apparently not up to the many users' liking.


Counterintuitive as it may seem, all of this misguided rage could actually be a positive sign. It means people are paying attention to Yahoo!, and that changes (even small ones) have the capacity to splash across headlines. Yahoo!'s quarterly earnings were released as its email drama unfolded. Let's see if the buzz is translating into dollar signs.

Optimism or obfuscation?
The hard facts of Yahoo's latest earnings call and CEO Marissa Mayer's related statements may read as though they are referencing two different companies. Mayer said she was pleased with the results, and emphasized that the site's 800 million monthly members reflected a 20% increase over the past 15 months.

The financial factoids, however, sing a not-so happy tune. Revenue dropped to $1.13 billion, 5% lower than where it was in Q3 of 2012, and while Yahoo!'s operating expenses are $3 million lower than they were last year during Q3, its operating profit is $59.4 million smaller. Even more shocking is its net income, which dropped 91%, from $3.1 billion in last year's Q3 to just $298.9 million.

These findings might not be very surprising, given that, at the moment, Mayer has admitted to placing more of a priority on revamping Yahoo!'s structure and culture than its profitability. Now, a year and a few months after Mayer's CEO appointment, the work culture has been reshaped, countless companies acquired, and several internal changes (like its logo, site appearance, and email system) made. With these changes in place, and the looming risk of progressively growing losses, now seems like the ideal time for Mayer to implement the next step in her "chain reaction" plan: effectively monetizing Yahoo!'s content for advertisers.

Alibaba and the indifferent market reaction
Did the market frown upon the disparity between Mayer's hopefulness and Yahoo!'s widening quarterly losses? Not especially. On the day following the earnings release, Yahoo!'s price per share dipped a mere 3% from $34.20 to $33.13, and by last week's close, shares were up to $33.43. Even at its lowest point, that price is still higher than Microsoft's intentions to buy out the then-beleaguered search engine back in 2008 for $31 per share.

One reason for the collective "meh" on Wall Street is that Yahoo! also just announced it has reduced the total number of shares it will be required to sell upon the much-anticipated IPO of e-commerce group Alibaba Group Holding Limited, from 261.5 million to 208 million shares. Yahoo! currently owns 523.6 million shares in the company, which, through its two marketplace and shopping websites Taobao.com and Tmall.com, brought in 1 trillion RMB (or $160 billion) year to date as of March 2013.

It also looks like Yahoo!'s remaining 315 million shares aren't going anywhere anytime soon. According to Executive Vice Chairman Joe Tsai, "Yahoo! has made a priority to build a good relationship with Alibaba." That's a good relationship to have: Yahoo's stock moved up to $34.54 on October 22, mainly on a report that Alibaba got a thumbs-up from the Nasdaq and the New York Stock Exchange on how it plans to file its IPO. Should that company go on to be a Wall Street darling, the results could be worth a pretty penny to Yahoo! investors.

Cuckoo for Yahoo!?
As Marissa Mayer continues to rebuild Yahoo! into something more dignified than what it was just a few years ago, investor trust is a critical metric to keep. The company's claim in a promising soon-to-be IPO might help strengthen shareholder morale as Mayer and Co. continue to restructure, but the company will still need to eventually prove that it can put its money where its mouth is in its content and that all these changes weren't simply superficial.

Watching a once-depressed tech stock rise try to pick itself up out of the ashes isn't for the faint of heart, but at least it's never a dull moment. In announcing its updated stake in Alibaba, Yahoo! has at least bought itself a little more time to keep trying.

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The article Why You Should Keep an Eye on Yahoo! originally appeared on Fool.com.

Fool contributor Caroline Bennett has no position in any stocks mentioned. The Motley Fool recommends Yahoo! Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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