Should the Yahoo Finance Failure Concern Shareholders? (YHOO)

In a remarkable article, Yahoo Inc. (YHOO) insider Jeremy Zawodny describes how Yahoo failed to implement many of the features launched this week by Google Finance. This is must-read material for Yahoo investors. Here are key excerpts, followed by comments on the stock:

Yahoo! Finance has stagnated for a long time. It never really recovered from the pain of the dotcom crash. So many of my old Finance coworkers have either left the company or moved on to other groups (several moved into Search last year). Heck, I encouraged many of them to get out!

There was a lack of leadership and, even more importantly, a serious LACK OF VISION. It really disappointed me.

It makes me sad because virtually all of the new/innovative/cool features in Google Finance are things we talked about YEARS ago. Many of them I'd lobbied for repeatedly. Some were even prototyped.
• A ticker search that doesn't suck.
• Charts with overlays for news events.
• Blog integration.
• Featuring discussions more prominently.
• RSS support.

...I'm not gonna name names (virtually none of them are around anymore anyway), but there was a real lack of leadership in Finance for long time and it really sucked the life out of the group. Users noticed. Finance employees noticed. Other Yahoos noticed. We all knew it. And, frankly, I was glad to be out when I moved on...

Over the years since leaving, I've made pleas to numerous people in the Finance organization: engineers, product managers, engineering managers, editorial, and so on--veteran employees and newbies alike.

Push into community more. Get more into personal finance, not just the high-end Wall Street stuff. Adopt blogging and syndication. Get around to those chart improvements we'd talked about. Fix up the message boards. (Remind me to tell the story of how they freaked out when I snuck RSS feeds out back in 2002. It took another TWO YEARS before someone re-did that work and finally shipped it. But the RSS train had already left the station by that time.)

Radio silence.

Last year I started talking about Google Finance and they got a little excited. They talked more about all the stuff they could maybe do. Asked for some input (again). My hope was renewed for a while.

...As a company, we need to get better about facing this stuff, dealing with it, and get back to kicking ass. But I have no idea how to make that happen. Maybe this will result in some useful discussion somewhere.

There's a light at the end of the tunnel. All hope is not lost. Unlike a small number of Google product launches, this one didn't blow the doors off. It's no Gmail or Google Maps. Yahoo! Finance isn't out of the game. But I sure as hell hope this is a wake-up call!

On the flip side, Katie's a kick-ass product manager and knows the Finance world very well. I can only imagine what else they're cooking up. The clock is ticking.

Mr Zawodny's points are then confirmed by other Yahoo insiders in comments:

• I fully agree with you and am really disturbed that we did not react in time.... specially since many of these changes would have been very easy to implement. Heck even a better looking UI would have taken the air out of G finance launch....
• sigh. man I share your feelings... thanks for writing about this jeremy. I'll just keep it at that. :)
• Very well said Jeremy, and you are right - Katie was one of the best people we had working in Finance.

Mr Zawodny's full article is definitely worth reading, as is his blog.

Yahoo shareholders need to consider the implications for the stock. Finance is one of the key advertising and search verticals, and Yahoo! Finance is likely one of the company's most lucrative businesses.

But the issues arguably go wider than just Yahoo's finance business. Under Terry Semel, Yahoo has been focused on monetizing its traffic and eliminating unprofitable projects. But some believe it lost focus on the end-user experience. (Jeremy Zawodny's revelations certainly seem to confirm that.) The loss of focus on the end-user made core Yahoo services -- mail, IM, maps, and now finance -- susceptible to attack from Google.

The question for shareholders is whether Yahoo can refocus itself on the end user via acquisition (Del.icio.us, Flikr) and internal reorganization, or whether a turn-around in the company's culture will take too long.

One thing is certain: the picture of mismanagement and incompetence that Mr Zawodny paints surely raises red-flags about Yahoo's ability to compete with Google in the near future.

Related:

1. More opinion and analysis of Yahoo! Inc. and its stock
2. Google Finance: 6 Short, Must-Read Articles
3. Founder of MarketWatch on Impact of Google Finance
4. Full transcript of Yahoo's most recent conference call
5. More opinion and analysis of Google Inc. and its stock