Waiting Impatiently for a New Yahoo CEO

Ever since the Microsoft (MSFT) deal fell through, Yahoo (YHOO) has been in a free fall mode. The stock got battered and hit a new 52-week low yesterday of $17.75. Shareholders have received callous treatment in the hands of the Board and Management, and now Carl Icahn and his buddies have stepped in to make things better. Well, things seem to be getting much worse before any signs of “better” comes along.

Yahoo's Q2 results (reported July 22) were disappointing. Revenues of $1.35 billion in the quarter grew 8% over the year but failed to meet the Street’s expectation of $1.40 billion. However, the company was able to meet EPS expectations of $0.10. By segment, Marketing Services revenue grew 7% to $1.14 billion for the quarter. They earned $0.21 billion as Fees revenue. By region, revenues from the US grew 6% over the year and international revenues grew 14% in the period. Yahoo did express concerns about economic conditions, particularly softness in advertising for financial services, travel and retail, which impacted their brand display advertising. They expect Q3 GAAP revenues of $1.78-$1.98 billion with TAC percentage of 25-26%. For the year, they are projecting GAAP revenues of $7.35- $7.85 billion with operating cash flow guidance of $1.83-$1.98 billion.  

Yahoo has been trying, much against my liking, to portray themselves as a stronger search engine. They took quite a few initiatives last quarter in the search space. They launched Search Monkey, which provides “outside developers control over the appearance of their search results, including photos, logos, and multiple relevant links directly in the search results.” They also launched Glue Pages in India which deliver “more relevant, visually appealing search results from across the web in one topical page.” Finally, they launched Build Your Own Search Service (BOSS), “which opens up their search infrastructure and technology to developers and companies and empowers them to create custom search experiences off Yahoo.”  

During the past quarter, they also signed an advertising agreement with Google (GOOG). As part of the transaction, Yahoo has allowed Google to put search ads on the Yahoo site for a potential $800 million opportunity; the company sees the transaction as the next step to creating a more open advertising environment. They continued to improve on their content in the quarter. Yahoo Buzz expanded to over 350 publishing partners, surpassing Digg to gain the number one position in its category. 

Yahoo also spent $22 million in the quarter on advisors to deal with the Microsoft bid for acquisition. As Microsoft has revoked the offer to purchase, Yahoo still has a chance to become the Web 3.0 jewel I believed it could be. It needs verticalization and some serious changes at the top management level.

A new CEO would really help. How long do shareholders need to wait? How much worse does the situation need to get?

Comments

[Anshul:]

Look Beyond what you see...
Are you one of the belivers that things can change overnight. Spend time and look into what changes Yahoo as an organization is having. Give Jerry some time.

You need to look at the motove behind the acquisitios they have made (Zimbra, Indextools, Right Media, and others)

Go to suggestions.yahoo.com and see how all Yahoo properties are reorganizing to become customer centric.

I can not list what all they are doing... just try to do it at your end and you will realize...

You people are really after killing a great company.
Just do a basic research on what plans this company has before demanding a new CEO or a buyout.

2008 Sep 06 06:59 AM

[mollytjm:]

i seriously don't want microsoft owning yahoo but 'Jerry' has had quite a long time to be more innovative and competetive. and i'm not sure who 'you people' is meant to address, but most of us would love to see yahoo succeed.
yahoo is tech and tech has to be able to move fast...it's not like the car industry. tech is 'overnight' and if it can't be, it doesn't make it. yahoo rested on its laurels when it should have been more aggressively innovative. now is the time. soon it will be too late.

2008 Sep 06 11:12 AM

[Anshul:]

We are talking about a company in teh range of 10,000 employees. It needs its time to innovate.

Well, if you want to see whats happening in the hood you should be caring about
1. Yahoo!'s work on the Hadoop (now used by Facebook, Google, Microsoft, IBM, and large number of other people)
2. Their Mobile products, especially OneConnect and Voice search
3. Repositioning of Yahoo! news as an Internet news channel
4. Connected TV (with Intel, Samsung, Sony)

The list can keep on growing.... they innovate but it needs time before you can see the results... Many of the good changes are delivered.

Leave the time when Terry was heading Yahoo and it was getting towards and entertainment company (more like AOL)
Its back on track to innovate (technically as well). And technology products do need careful deliberation for the complete development lifecycle.

If you can, try saving some time for Jerry by keeping people like Microsoft and Icahn dancing on his head.
Damn it, they wasted more than 5 months and 20+ million dollars of the company.

Time invested now can fetch much more results down the line.


Technology needs careful thinking if you want to have senseful products out of it.

2008 Sep 06 04:05 PM

[notformymoney:]

yahoo stinks, they took my money before my my host renewal date and
won't refund. Their customer service people have no power and you can't talk to any supervisors. Who ever is making the rules needs to take lessons from Mac.

2008 Sep 13 12:30 AM