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In terms of search, Yahoo is playing the same game as Google. That is, a Yahoo search will yield similar results to a Google search. So even if Yahoo can improve its search incrementally, it likely won't be enough to steal users from Google, which consistently pulls down 65% or more of online search market share.
The only way for Yahoo to change the game in search is through transformational improvement -- doing something nobody else has done before in search, or doing something important far, far better than competitors. But I don't see that there's anything Yahoo can do to transform online search.
All that being said, search delivers about 37% of Yahoo's revenue, so it's not likely Mayer will give up on it. Back in July 2012, when Mayer was named CEO of the troubled Internet pioneer, search expert Danny Sullivan speculated that she might make search a lower priority for Yahoo, and for precisely a reason to which you alluded:
"Mayer might surprise me by announcing that Yahoo will refocus on search. But my guess is that she knows the odds are against that. She knows that search companies have won by owning their own search technology and that it’s too late for Yahoo to rebuild its technology at this point, not to mention that under the terms of the deal, it can’t use the tech it gave up to Microsoft for about seven years or so."
Beyond that, the former Google executive knows how good her former employer's search technology is, not to mention its deeply talented staff. Whatever she said in the earnings call, I suspect Mayer is looking beyond search. That battle's been lost.