Why Yahoo is in Trouble

| About: Yahoo! Inc. (YHOO)

Here is a phenomenal business model. Spend lots of money developing rich content to attract advertisers then make it really difficult for them to give you their money. If you would like to invest in this business, get in line behind Microsoft (NASDAQ:MSFT). Or is it Google (NASDAQ:GOOG), or maybe AOL (NYSE:TWX)?

This is exactly the model that Yahoo (NASDAQ:YHOO) seems to be following. Of course, I'm sure that if you are a major corporation looking to spend millions, Yahoo! will beat down your door. However, if you are not a major player, but are looking to spend more than $3000, good luck getting their attention. And I didn't just make up the $3000 number. It's the cutoff listed on their site for getting their attention. Try the following experiment. Go to one of the verticals on the Yahoo! site and see if you can figure out how to give them your money to advertise there.

I actually wanted to advertise a business of mine in one of their verticals and this is what happened:

  1. No link within the vertical for advertising.
  2. I poke around the site and find links to at least 2 different forms that have something to do with advertising. I fill in the forms and wait for the pesky sales person to call me. No call after 2 weeks. Maybe they're all busy updating their resumes.
  3. I poke around the site a bit more looking for a phone number. It's at least 3 clicks deep, cleverly disguised so that you can't find it if you are looking to actually talk to a human. Obviously, the humans can't be bothered with people trying to give them money.
  4. I call the phone number, which they reiterate is the advertising number, and listen to 3 options that have nothing to do with advertising before being given the 4th option for advertising.
    • Option 1: Call corporate
    • Option 2: Find out how Yahoo! comes up with their search results
    • Option 3: For Yahoo! free services (wanting something for free places you ahead of wanting to pay for something)
    • Option 4: Advertising
  5. It's a little after 4 PM Central time, so they've gone home for the day. They only operate until 5PM Eastern time because if you are in the 2/3 of the country that wants to give them money until 5 PM where YOU live then you need to call back when it's more convenient for them.
  6. I call back the next day at 3 PM Central time but get a recording telling me that all their employees are in a meeting - probably meeting about how they shouldn't worry about losing their jobs when they get bought out. The recording continues to play until 4 PM when it changes to the message that they are only open until 5 PM Eastern.

With an operation like this, who wouldn't want to own this stock?

Disclosure: Author has a long position in YHOO