Yahoo: Internet giant is in search of a CEO and a strategy

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By Anderson /  07 Sep 2011 , 16:29

The only way that Yahoo could have sacked CEO Carol Bartz in a clumsier and less classy way would have been if they had done it by text message instead of a phone call.

I’d like to report her dismissal came with a clear message about a new direction for the internet giant, but it didn’t. After creating the first internet portal, Yahoo has been looking for a second act and has failed at almost every turn.

Bartz was brought in less than three years ago after a bid to merge with Microsoft failed and she had to settle for a much more limited deal with Microsoft to use the software company’s search technology.

Fred Prouser/Reuters

She pushed through two rounds of job cuts to re-focus the company, but the cuts didn’t come with any new, coherent strategy.

“Bartz was ultimately sunk by a drama-go-round that never ended. Yahoo never quite got its act together even though Bartz made some solid moves to set the company on better footing,” said Larry Dignan of ZDNet.

If employees had been asked, they probably would have given Bartz a vote of no-confidence. Company tracking firm Glassdoor said that her employee approval rating had plunged from 90% in early 2009 to a low of 24% last quarter. In comparison, when Steve Jobs stepped down as CEO of Apple a few weeks ago, his approval rating stood at 97%.

Former Yahoo vice president Brad Garlinghouse had this to say about her dismissal on Twitter: “ding dong the witch is dead”. In 2006, Garlinghouse wrote an internal memo called the Peanut Butter Manifesto, warning that the company was spreading itself too thin.

Employees are rarely happy at companies suffering cuts, but despite public statements of support as recently as June, the board is seen to have lost patience after issues with two valuable investments in Asia: Yahoo Japan and Chinese e-commerce company Alibaba

As Staci D. Kramer of paidContent said: “Yahoo can’t tell its own story.” She was referring to poor corporate communications, but it’s really more fundamental than that. Yahoo hasn’t known what it is for much of the past decade.

Yahoo has tried to be a media company, a search company and an enterprise company, and the shifting focus has left it directionless, eclipsed by in search by Google and in social by Facebook and Twitter.

A lost decade

Ten years ago, then CEO Terry Semel tried to turn Yahoo into a media company. Semel had spent 24 years at Warner Brothers so it probably seemed a logical move to him, especially in light of AOL’s takeover of Time Warner the year before he took the helm.

Yahoo’s drift began under Semel. The company missed an opportunity to buy Google two years before it went public. If that wasn’t bad enough, they also missed an opportunity to buy Facebook.

Instead of closing these big deals, Yahoo became a collector of Web 2.0 companies like social bookmarking service Delicious and pioneering photo-sharing site Flickr. But instead of creating a powerful network of properties, under Yahoo’s management, promising companies became a melancholy menagerie of stagnant start-ups.

Semel was forced out in 2007, over what was perceived as an out-sized compensation package. Co-Founder Jerry Yang came back as CEO, but he stepped down after the failed merger with Microsoft. Bartz has been at the helm since then.

New direction?

Will Yahoo remain as rudderless as it has appeared for the last few years? It is still in the running for video-on-demand service Hulu and a successful bid there could answer a lot of questions for Yahoo. The question is whether turmoil at the top could hurt their chances.

On the plus side, Yahoo hasn’t posted a quarterly loss since the fourth quarter of 2008 as the global financial system teetered on the brink. It still has a strong position in display advertising. If the Hulu acquisition falls through, Yahoo would be an attractive takeover target, and the Wall Street Journal, citing anonymous sources, says the company is “open to selling itself to the right bidder“. A move that Business Insider was akin to hanging a big “For Sale” in front of the company.

A good move for Yahoo would be if it finally figures out what it is and what it wants its future to be. Sadly, after a lost decade, we’re still waiting for Yahoo to solve its identity crisis.


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