The value of Yahoo! is fading. Where once there were green pastures, emptiness resides. The internet portal pioneer is losing relevance, traffic, revenue, credibility and CEOs. Most importantly, they’re losing value.
Despite all of the negatives that have happened over the last 4 years, Yahoo! is still a huge company that, believe it or not, has a potentially strong future. That future is only bright if they do what they should have done three years ago – sell to Microsoft (or anyone else who is interested).
Current value is in the traffic, not assets
While many business and tech blogs are debating over whether Yahoo! should sell their foreign assets, domestic assets, or both, most are missing the point and the real value that the company currently has. The eyeballs are there, second only to Google, and a properly-positioned Yahoo! can quickly improve their revenue-generation by focusing on that.
Things were complicated when Carol Bartz took over as CEO and they’ve become even more complicated under her reign. The Microsoft advertising partnership that she put together has yielded much less fruit than expected and the Alibaba feud was as embarrassing as it was painful to their bottom line. Mix that with debacles on their holdings and assets such as Delicious and Yahoo Buzz and you have the primary reasons for the deterioration of the once-mighty company.
Despite all this, people still go there. A lot.
“For whatever reason, millions of people still want to go to their sites everyday,” said Eric Jackson of Ironfire Capital. “Given that they have this huge traffic, there’s still time to leverage that.”
Advertising companies, data companies, and publishing companies alike all covet traffic. While Microsoft is the easiest candidate to see wanting to buy Yahoo (at less than half of what they offered in 2008) they would not be the only ones if Yahoo! decided to go for an all-encompassing deal.
The traffic will fade the longer they wait. When traffic takes a sour turn, the true value of the company will go down at a rate faster than the decrease in revenue.
The need for innovation and excitement
Some would wonder why they don’t simply reorganize, regroup, and take advantage of the traffic themselves. With that much, surely they can bring in a strong CEO and turn the company around.
Unfortunately, not everyone is Steve Jobs. It has been proven time and again that tech companies get one chance. Once they start to drop (AOL, MySpace, countless others) there’s no turning back. Apple was the exception.
Breathing new life into a company requires drastic measures. It’s not just in coming in and making changes. It’s the shareholders’ confidence that must be turned. When the problem with a large company is blamed on the leadership, change is all that can turn the shareholders. That’s it.
The Steve Jobs/Apple turnaround marked an interesting point that Yahoo! should consider. Jerry Yang was not a successful CEO, but many are now seeing that it wasn’t necessarily his fault. Just as Apple ousted Steve Jobs and brought him back, Yang should be considered a top candidate for the top spot. No, he shouldn’t be hired as CEO by Yahoo!, nor should he be brought in as CEO if Yahoo! is sold.
Jerry Yang should buy Yahoo!
If there are two things that Yang could bring to the table if given the same type of control he had when the company was first formed, they would be innovation and excitement. The return of the old regime under new concepts and a different environment could be exactly what Yahoo! needs to survive. Those who say, “But Jerry Yang is no Steve Jobs” would be correct. Thankfully for them, Yahoo! doesn’t need someone of Steve Jobs’ caliber.
As a tech company, Yahoo has failed. As a portal and “traffic light” of eyeballs, they can build on their successes from the past and find new success in the future. They simply need someone to take the lead and lose the current board.
Whether that’s Yang, Microsoft, AOL, or anyone who can scare up $20-$25 billion dollars, the move must be made relatively soon or Yahoo! will be painted into a corner where they have to hire a CEO and start building the company again. If that happens, both Yahoo! and potential buyers will be hurt by it. As their value decreases, their potential for success decreases even faster. There’s no slow-playing the waiting game on this deal. It must happen soon or the site could be a lost cause for everyone.