Maybe Yahoo Was Destined to Flounder

carol_bartz_thumbCome Tuesday, Yahoo (s yhoo) will step up to deliver its most recently quarterly results, which I doubt will be very much fun. Still, it will be the first time recently appointed CEO Carol Bartz will have a chance to publicly address the most significant question facing the company: When is it finally going to take steps to turn things around?

Another milestone date lies a little further ahead: Feb. 1, the one-year anniversary of Microsoft’s (s msft) proposed acquisition of Yahoo, an event that set the Internet giant into a maelstrom of turmoil no company would ever willingly choose. But while Yahoo has made decisions that many view as wrong, were there ever any better alternatives?

yhoo-msft-post-bid2A purchase by Microsoft might have left shareholders a lot happier (though not all — Microsoft’s initial bid let investors take cash or Microsoft stock; Microsoft’s stock is down 47 percent since that bid, while Yahoo’s is down 41 percent. In retrospect, the smartest thing a Yahoo investor could have done is sell the stock near $30 a share in the wake of Microsoft’s offer).

As for Yahoo itself, it would be hard to imagine it flourishing inside Microsoft. The corporate cultures wouldn’t mix well. Microsoft’s ability to handle search has produced steady losses. And non-search initiatives may have languished in a company that was never interested in them to begin with.

What about the other options, like a merger with AOL? No one ever showed much confidence in this path (often likened to tying two bricks together). As for an alliance that would have seen Google’s (s goog) ads run alongside Yahoo’s? Leaving aside antitrust entanglements, the deal would have been no more than a short-term life-support system for Yahoo, one that would have failed to address the company’s real problems.

One of the deeply rooted reasons behind Yahoo’s rejection of Microsoft’s $44.5 billion offer was Silicon Valley’s antipathy toward the Redmond giant — a grudge that stretches back decades but that in this terrible economy seems almost anachronistic. The bully Microsoft that quashed many a promising startup was chastened long ago, and now finds itself struggling for a footing in the emerging world of cloud computing.

Where does that leave Yahoo? Independent, but a mere shadow of its former self, the company that as a kindly, handholding web portal (remember those?) ushered hundreds of millions of new people onto the Internet, established the way we check stocks and email on the web, and did more than anyone early on to woo the biggest non-tech brands into spending ad dollars online.

More recent, albeit smaller, successes like Flickr, Buzz and Answers demonstrate that such pioneering spirit is still alive in Yahoo, just caged inside a stifling bureaucratic culture. To right itself, Yahoo must make some tough choices. But looking back over the past year, it’s not clear that any of the alternatives open to it would have been much better than the ones it’s already made.

So maybe Yahoo was just destined to flounder. Facing dark times could force it into the kind of discipline that may return it to greatness. The problem with Yahoo has never been that it didn’t opt for this merger or that partnership, but that it lost the vital connection it once had to its users. Independent or not, if Yahoo wants to survive, it needs to reconnect with them.

Chart courtesy of Google Finance.