Sunday, July 01, 2007

What is Yahoo For?

I'm in holiday mode today, but I'll pause briefly to call attention to the NYT piece on Susan L. Decker (link), newly ordained President of Yahoo. It begins with a ringing endorsement from Warren Buffett, followed by an admiring and only occasionally gushy account of her career.
But you have to keep your eyes open to realize that some people with reason to know think she is not so much part of the solution as part of the problem. So:

Now, some analysts question whether Mr. [Jerry] Yang [Co-founder and newly minted CEO] and Ms. Decker, both of whom are generally well liked and respected inside Yahoo, are the right team to lead the company. Neither has extensive operational experience, and both are intimately linked to the strategy that has landed Yahoo in its current malaise. Yet both have said recently that Yahoo does not need a new strategy, but rather, must do a better job of executing its existing plan. Many people on Wall Street and in Silicon Valley, as well as some inside the company, doubt that better execution alone will be enough. The suggestions for more dramatic changes range from a merger or sale, to Yahoo’s exit of the search business.

“If I were them, I would be considering everything, because more of the same seems unlikely to produce encouraging results,” said Derek Brown, an analyst at Cantor Fitzgerald.

Much later:

But analysts say Ms. Decker is also intimately tied to many of Yahoo’s recent shortcomings. They include not only the delays in Panama, but also a series of mistakes in communicating with Wall Street about those delays, which have hurt Yahoo’s shares. And they include the failure not only to acquire Facebook, but also to secure lucrative deals to sell advertising on Facebook and MySpace, which were won by Microsoft and Google, respectively.

“Yahoo was nowhere to be found,” said Scott Kessler, an analyst at Standard & Poor’s.

Even the recently announced acquisition of Right Media, which Yahoo considers a success, could have gone better. Yahoo paid less than $45 million for a 20 percent stake in Right Media last October. By the time Yahoo decided to buy the rest of the company in April, Right Media’s value had soared, forcing Yahoo to pay an additional $680 million for the remaining 80 percent.

“That, again, is an indication of a lack of decisiveness,” Mr. Kessler said. “At the end of the day, Sue had some role to play in a lot of those decisions and a lot of the mistakes made.”

Ms. Quarles of Thomas Weisel fears that Yahoo’s recent troubles in display advertising may be a sign that history is about to repeat itself. As Yahoo stood still in search advertising, Google innovated at a furious pace to become the runaway leader in that business, she said. Then, when Yahoo finally turned its attention to search, with Project Panama, it stopped innovating in display advertising, just as Google began aiming at that market.

With its planned acquisition of DoubleClick, an online ad firm, Google could encroach further into the one big business where Yahoo still leads.

“It’s going to be challenging,” Ms. Quarles said.

Sounds right to me. As an outsider and casual dabbler, it's been hard for a long time for me to figure out just what Yahoo is there for.

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