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Yahoo: Old Wine, Old Label

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company_overview.jpgHoward Rubenstein’s first rule of crisis management is this: Always tell the truth. That’s exactly why so many people suspect Yahoo is still in trouble, even with its vilified lightning rod – formerly known as CEO Terry Semel – has been shown the door, or showed himself the door, or whatever happened.

It’s not very clear – and that is precisely the problem with Yahoo, with or without Semel.

The news, at once surprising and overdue, is nevertheless good enough to drive the stock up 4.7% in aftermarket trading. Yahoo’s stock came alive in the last 90 minutes of trading, as word seems to have spread about Semel’s imminent departure. Since then, the stock has gained 6.3% – in stock terms, surely one of the most productive days Semel has had in months.

But as significant as the news is, it raises more questions than it answers. Look at how the board pats Semels’s back with one hand even as it shoves him out with the other. Or how Semel is forced to praise his successors – one of the biggest dishes of crow an Internet executive has had to swallow in some time. And then there’s new CEO Jerry Yang’s ebullient blog post, where he rambles on giddily about Yahoo’s vision going forward.

“A Yahoo! that executes with speed, clarity and discipline. A Yahoo! that increases its focus on differentiating its products and investing in creativity and innovation. A Yahoo! that better monetizes its audience. A Yahoo! whose great talent is galvanized to address its challenges. And a Yahoo! that is better focused on what’s important to its users, customers, and employees.”

He might have added: ” A Yahoo! that can say: ‘I’m good enough, I’m smart enough, and doggone it, people like me!'”

Yahoo has been a vital presence in the Web world for at least a dozen years. It’s sad to see it without its mojo. While I don’t buy the line that Yahoo was a check against the evil monolith of Google, Yahoo has been in the past a key competitor, making Google better by being itself very good.

Then it jumped the rails. Innovation was stifled, executives bolted in disturbing numbers, and the stock drifted downward. Everyone (I’m betting even Google) wants to see blood back in Yahoo’s veins. But there are several questions that demand to be answered frankly:

  • Why not Sue Decker as CEO? Why Yang, who Semel was brought into replace after he and co-founder David Filo let the company run adrift?
  • Yang must have improved as a leader of a large company, but how can anyone be sure?
  • Does this change Yahoo’s chances of being bought out by, say, Microsoft?
  • How soon will Yahoo fill management holes and revive morale, and how will it do so?
  • Aside from deploying Panama, what concrete strategies are planned to return Yahoo to success?

I think Yahoo investors would have slept a lot better tonight having read a single statement like this: “We thank Terry for his contributions as CEO, but investors with a larger stake in the company than he has have pushed him out. It may look like things are a mess right now – and they are – but we have a solid plan to right the company this year.”

Instead, we have corny PR. I doubt we’ll really know whether Yahoo can return to its former glory until another quarter or so. But if this Internet star continues to devolve into an Internet dwarf, it’s not just Yahoo who will suffer, it’s all of us.

15 Responses to “Yahoo: Old Wine, Old Label”

  1. “Why Yang, who Semel was brought into replace after he and co-founder David Filo let the company run adrift?”

    Not quite. TK and Jeff Mallett ran Y! from 1995 until when Semel came in. TK took it public and managed the street, Jeff managed the company as COO.

  2. Perhaps the last of the media integration shills has finally left the building. Hey, Terry, I hear that Steve Case is looking for someone who still remembers how to speak 1999 jargon. You know: collaboration; leverage; clicks; eyeballs; paradigm shifts; new economy. Another member of the industry of distraction bites the dust. So long.

  3. Kevin Kelleher

    Ivan, good point regarding Koogle. But neither does Yang (nor Filo) have experience running a $6 billion company.

    SSDJ, Interesting anecdote. Thanks.

  4. “Instead, we have corny PR.” – How long have you been a reporter / blogger for? Come on – Corporate America never or rarely speaks the plain truth! It would be naive to think otherwise.

    I think we are being nostalgic about the Internet without a Yahoo! Is the world any worse now that Netscape is gone…? This is the tech / internet field. Shift happens.

  5. ‘Why Yang, who Semel was brought into replace after he and co-founder David Filo let the company run adrift?’
    You seem to have missed Tim Koogle who actually ran Yahoo! for the first six or seven years. Yang and Filo never actually ran Yahoo! so they can’t really be accused of letting it run adrift before Semel got in. Yang is now CEO for the first time, although he is a founder.

  6. I am a Yahoo employee. Let me tell you a small tale of why Yang is not just a weak CEO candidate – he’s even a pathetic CTO.

    Every quarter or so – Y! holds a hack day. Six months back Mr. Yang got particularly excited about a hack that lets third party sites show Yahoo ads that leverage the viewers behavioral profile on Y!.

    All fine and good. Except of course that this is trivially simple. All that needs to happen is that Y! needs to serve ads from (so that the user’s Y! cookies are visible to the ad servers). However – for the longest time, Y! has not done that (it has used as it’s serving domain for third party ads).

    This purported hack (which was voted best-of by execs – mainly including Yang) – instead required users to sign on to Yahoo and for the third party site to place a login widget on their site. How can a CTO level person not see that a much simpler and more obvious solution is preferable?

    Of course, the hack never went anywhere. Mr. Yang may not get it – but thankfully – many lesser mortals in Y! do. In many years of serving Silicon Valley firms, I have yet to see a company with such diminished technical leadership. (Mr. Filo is no better – but that would require even more verbiage).

  7. Just anecdotal pondering of the navel… But, was Mr. Semel 6 points to the bad? Or, is Yang 6 points to the good (on rep alone no less)? And, how many frontline employees would it take laying off to yield a 6 point bounce like that? Semel was cut. Somehow, someway he was cut.

    Mrs. Decker has a mission critical product to deliver. Until that beastie lands… it makes NO sense yanking her from the lineup and serving her a heaping helping of distractions.