Yahoo Finally Admits Failures

Yesterday's shuffling of senior officers at Yahoo, beginning with Terry Semel's departure, is long overdue. As long ago as last summer, in this post, I wrote of the company's lack of strategic direction, including Semel's ability to even correctly describe his firm's need for 'strategic planning.'

Since that time, I've written several other pieces about the firm's travails. You can locate the most recent ones by clicking on the label "Yahoo," among the listed topics on the side of the main page of this blog.

As this, ironically, Yahoo-sourced chart displays, the past two years have been abysmal ones for that firm. Especially compared to Google. What clearly meets the eye is how the S&P500 easily outperforms Yahoo, with Google far above it. With its long experience in online businesses, you have to wonder how Yahoo squandered its early brand awareness.

I continue to contend, as I did in this post, from March of this year, that Yahoo has never successfully identified just what it offers that can command a sustainable price in the online marketplace.

Now, Semel has stepped down, and co-founder Jerry Yang has assumed the CEO title. As my partner said, when I mentioned it,

"yeah, that's going to work."

Doesn't it always? Chuck Schwab at his firm, or Ted Waite at Gateway Computer. Oh, right, and another computer maker, Dell, with Michael Dell returning to its helm.

Whether recent-hire, and newly-appointed President of Yahoo, CFO Susan Decker, will actually make a difference, is questionable. Some analysts believe she is only going to need to be open to a sale or merger, in order to effectively discharge her new responsibilities. Perhaps so.

I'm sure there will be lots of press about Microsoft/Yahoo or AOL/Yahoo mergers. And maybe one of them will even occur.

To me, however, the most likely epitaph for Yahoo is that it remained the used car of the online world for too long, wasting its early, premier position in so many nascent areas. Now, I believe Schumpeterian dynamics have overtaken it, rendering it a largely has-been collection of concepts, technologies and online information offerings. If they haven't managed to collect revenues for most of this by now, thus setting expectations of free services, what makes you think someone else can do better without losing visitors, resulting in continued problems achieving profitable growth and, with it, consistently superior total returns?