Yahoo’s Semel On Defense About Yahoo’s Performance

The deck for The Economist’s look at Yahoo telegraphs clearly enough that this is not going to be a positive story: “While Google and small internet firms race ahead, Yahoo seems to be standing still.” Sure, the company has been acquiring “human”-based services like Flickr and del.icio.us. Yes, Yahoo Answers has 50 million-plus users in 20 countries in just nine months. But “none of these is a solid answer to Yahoo’s woes.” Tagging isn’t mainstream and Answers is deemed “arguably full of rubbish.” Yahoo will have “to pay an enormous price for Facebook” because it didn’t get MySpace, AOL or an ad deal with Facebook.
Then again, former high-flying analyst Henry Blodget, described here as founder of a consultancy, is the main analytical source, arguing that Yahoo is still suffering from the late 1990s mistake of not realizing search was vital.
— Semel’s portrayal in the article is equally less than glowing. The most negative comment comes from an anonymous outside advisor “who has sat in on executive meetings” and describes Semel as a “low-risk, non-confrontational guy” and the atmosphere as not entrepreneurial.
— Semel points out during an interview that Yahoo is a steady number two in search with Microsoft as the primary loser. Pamana, the delayed search project, will deliver financial results but in 2007, not 2006. As for the slowdown in two display-ad segments mentioned during an analysts’ conference — the one that knocked the stock down again — Semel said, “We still expect to outgrow the segment in 2006. This is not about a tragedy or disaster; it’s just pointing out something that we had seen.”
Then after all the naysaying, The Economist concludes with the assurance that “none of this means that Yahoo is in dire trouble;” it simply will have “to content itself with a position as the internet’s number two, at best.”

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