Sorting Out Fact From Fiction at Yahoo: The Telenovela Edition
Okay, here is what is true at this moment about Yahoo, which is sure to get even more caught up in the maelstrom of rumor and innuendo about its fate after the collapse of its controversial search advertising deal with Google today.
While Yahoo’s corporate gyrations are beginning to feel like there are more twists and turns than a Spanish telenovela, the actual situation is a lot less sexy and definitely more grim.
Simply put: Yahoo (YHOO) is in the midst of a very serious resetting of its business that might or might not go well, after years of mismanagement and damaging external forces over which it sometimes had control and sometimes not.
And there are valid questions about whether its current leadership is up to the task of reviving Yahoo, after one painful stumble after the next.
Nonetheless, Yahoo remains one of the Internet’s most trafficked and profitable sites and its products are uniformly excellent.
And, while it has lost share in search, it is still No. 2. In addition, even though its graphical ad business is suffering badly in the weak economy, it is still the best on the Internet.
But, let’s face it: What a mess.
Thus, in the interests of clarity, here is a rundown of the situation.
1. Yahoo CEO Jerry Yang is not stepping down. In fact, I will soon be headed out the door to see him onstage at the Web 2.0 Summit in San Francisco later this afternoon.
In fact, he seems determined to stay, until someone throws him out. And who would that be?
Maybe employees will revolt on the Sunnyvale campus in a purple rage? Doubtful.
In a two-part interview with BoomTown after its sad-sack third-quarter earnings were released, Yang was telling the truth 100 percent:
BT: You have been attacked a lot recently for not selling Yahoo to Microsoft, Yahoo’s low stock price and your management of the company–why do you think you are the best leader for Yahoo going forward?:
Yang: I think if you look at what the company is doing and what we have been going through and the story we have been telling, we have done most, if not all, of what we set out to do, starting last year.
My dream is to transform Yahoo as a platform and product company and I think we are on the way to really doing that. And a lot of what we have been doing is starting to translate into value–whether it is our front page, our profiles, our email or our APT ad platform.
And, in this uncertain environment, I think I am absolutely the right person. Times like this require a leader who really understands this company and its customers, and I think I do. The world is a different place today than even a month ago and I think I am the best person to guide Yahoo through this volatile time.”
2. The collapse of Yahoogle does not mean that Yahoo will now be automatically forced to turn to Microsoft (MSFT) to strike a similar deal, and on terms with no leverage.
After all, Yahoo is still the No. 2 player in search by far after Google (GOOG), with Microsoft trailing badly.
Of course, it must now contemplate spending a lot on keeping that spot, and it is not good to be caught between two warring moneybags.
3. Microsoft does not want to buy Yahoo and will not show up with another bid, unless the stock truly tanks and it becomes such an amazing bargain that CEO Steve Ballmer has to get over himself.
Microsoft is now only interested in Yahoo’s search business and there might be more talks to revive that offer in the future.
But, no matter what analysts pontificate about, neither is under any “pressure” to act fast. It is a crappy economy and everyone has cover to do badly for a while and scuttle along.
4. Yes, a merger deal with AOL looks more likely than not now, especially with the Yahoogle uncertainty out of the way.
Why? Well, Yahoo execs like it and Time Warner (TWX), which owns the AOL online unit, needs it. AOL’s poor results today should underscore that fact.
While integration issues are complex, it also brings together some of the biggest communications, advertising and content properties on the Web.
Done right–and that is a big if with both these crews in charge–it might work and give the pair the much needed boost they desperately need.
Done wrong, well, the soap opera just continues on endlessly.