The madness that is Yahoo! (for real now)

Before anything, let me declare one thing that we can all probably agree on. We, who during the early days of the Internet age had Yahoo as our home page, search engine, news portal, instant messaging service, personal website (GeoCities anyone?), and everything else that it helped advance at the time. To Yahoo!'s credit, they pretty much dominated the Internet boom. It is arguably the most important and most successful web destination of its time.

Of its time. That's the wickedly difficult part. It was the top website in rankings and had dominion over Internet traffic like no other. Now, that title is owned by Google, with Facebook trailing not very far behind. They're still there alright (No. 4 in Alexa as of this writing after YouTube, a Google-owned portal). But in their key markets, Yahoo is starting to lose its strength. In fact, it has bled global market share severely over time--Yahoo! search has less than 11% (even with Bing combined); Google has at least 75%.

A bit of history. Yahoo! was founded in 1994 by Jerry Yang and David Filo, both coming from Stanford U (interestingly, so did Google founders Sergey and Larry). Their first run was an Internet directory called "Jerry and Dave's Guide to the World Wide Web," which for some unknown, mysterious reason had to be changed in favor of Yahoo! eventually. Okay, I'm sarcastic. With its early successes, Yahoo!'s valuation rose all the way over $100 billion before the dot-com bubble burst. Around 2006, they peaked at about $43 billion, where Microsoft would offer to buy the company out for $44.6 two years later. Jerry Yang resisted it at utter disappointment of most Yahoo! shareholders. Yahoo!'s stock plummeted immediately afterwards; Jerry would be forced out before the end of the year. And in a move to rekindle the idea, Yahoo! would join forces with Microsoft over the Bing search engine in 2009. To compete with Google together. They have yet to make any significant dent in search.

After all the hullaballoo, including the short and disastrous term of CEO Carol Bartz, Yahoo!'s current valuation stands at just a little more than $18 billion, a far cry from its heyday. A few days ago, recently appointed CEO Scott Thompson announced the layoff of 2,000 employees (they have 14,000 worldwide), a move he says would generate "significant savings" and provide more focus in their core business. Wait. Does anyone know what that core business is?

By now, it's downright crystal that Yahoo! has lost its luster from its previous status as being the darling of the Internet. Now, it is an also-ran. And as much as a company can be revered for being a key player in shaping how the Internet is now, we have to admit the fact that Yahoo! is no longer a great company. Do you recall any big thing they've done in recent years? Have they excited you with anything lately? When was the last time you used Yahoo! Messenger? Do you have a Yahoo! app in your smartphone? The simplest questions are enough to say that they're just about done.

Unless Yahoo! finds their soul. The problem is, I can't for the life of me remember--what are they best at doing again? This question only confirms a looming disaster.

A failed merger that would not have worked anyway.


Co-founder Jerry Yang with the popular tagline.