W H A T A M E S S !
“ I just try to ship products that I’m not ashamed of ” – Jeff Bonforte, Senior Vice
President, Communication Products, Yahoo. (Dec. 1, 2015, New York Times)
What is Yahoo’s business model today?
Value Proposition
“ Portal for customer’s needs (search engine, email, news, weather, etc.)
Creates value for advertisers with a streamlined, simple advertising technology ”
Revenue Model
Revenues come from display and search advertising (pay-per-click and banner ads)
Why is Yahoo failing?
1. Lack of Strategic Focus
•No business line focusSearch vs advertising vs media vs investments
•No market segment focusattempted to serve all demographics
•Didn’t play to win in a winners-take-all market
2. Poor acquisitions and deals
•Excessive reliance on acquisitionsinstead of organic growth
•Poor Acquisition Decisionslack of synergies, integration, and strategic fit + paid too much
•Poor Deals Partnerships failed to maximize Yahoo’s interests (eg. Alipay, Mozilla)
3. Poor Corporate Governance
• Incompetent boardas pointed out by activist shareholders
•Excessive CEO changes8 CEOs in the past 10 years
Timeline: GROWTH (1994 – 2000)1
99
4
19
95
19
96
19
99
19
99
Yang
and
Filo
created
search
engine
Raised
$2MM
in
venture
capital
Went
public
Acquires
Broadcast
.comAcquires
Geocities
Acquires
many
other
companies
Stock
reaches
all time
high of
$475
Yahoo’s
human
editors
couldn’t
keep up
with the
search
engine
“Spider Bot”
19
99
20
00
Yahoo
is born
20
00
Timeline: COMPLACENCY (2000 – 2010)2
00
1
20
02
20
04
20
05
20
07
Stock
closes at
an all
time low
$8.11
Yahoo
invested
$1Bn in
Alibaba
Yahoo co-
founder &
CEO Jerry
Yang steps
down after
18 months
Microsoft
and Yahoo
agree to
search
partnership
20
08
20
08
Yahoo
tries to
buy
for $3Bn.
denied
the offer
20
09
Yahoo
acquires
many
media
companies
Microsoft
tries to buy
Yahoo for
$44.6Bn
Yahoo
denied
offer
Yahoo
launches
its own
search
engine
technology
Timeline: FAILURE (2011 – 2016)2
01
2
20
12
20
12
20
13
20
14
Scott
Thompson
appointed
as CEO
following
dismissal
of Carol
Bartz
Acquires
Tumblr for
$1.1Bn,
Summly,
and
others
Acquires
Polyvore
(online
shopping
site) for
$230MM
States
that
current
strategy
is to
focus on
“Search,
Mail,
Tumbler”
20
14
20
15
Sells half
of its
Alibaba
stake for
$7.1Bn
20
16
Acquired
Wander
(social
diary
website)
Acquired
Flurry
(mobile ad
company)
for
$200MM
Levinsohn
(interim
CEO)
leaves;
Marissa
Mayer
appointed
as CEO
“ … the core Yahoo business is actually destroying value.
It's possible that Marissa Mayer (Yahoo’s CEO) could increase her stock price by simply announcing
that she was shutting down all of Yahoo's websites and laying off all of its employees.” – VOX Technology analysis
%
The decline of Yahoo
0
20
40
60
80
100
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Global Search Market Share (%)Yahoo vs Google
Yahoo
Recommendations for the future
1. Focus only on key strengths
•Decide on strategic focus: Technology vs media vs Venture Capital
•Play to winSet goals, motivate people
•Move into adjacent markets later
2. Only make acquisitions that make strategic sense
•Have discipline when pursuing acquisitions
•Don’t overpay for acquisitions
•Ensure integration of acquisitions
•Make sure synergies can be achieved through the acquisition
3. Improve Corporate Governance
•Make Board fully accountable for CEO appointments
•Choose the right CEO who has the necessary skills
•Shareholder activism serves as a check-and-balance against Board of Directors
ReferencesYahoo Financial Report 2015, files.shareholder.com, 2015
Timothy B. Lee ,Yahoo is laying off 1,700 and putting itself up for sale, Vox,February 2, 2016, 5:50 p.m. ET
Wkipedia Yahoo, https://en.wikipedia.org/wiki/Yahoo!
Timeline of Yahoo!, https://en.wikipedia.org/wiki/Timeline_of_Yahoo!
Krishna G Palepu and others, HBR case study, Strategy and Governance at Yahoo! Inc , October 31st 2011
Tony Hannidies, 12 Yahoo Services That Will Shut Down by September ,Lazy Tech Guyz, June 29th 2013
Motley fool staff, Google stock: Buy it and hold it for life, fool.com,May 21st 2013
Margarit Reliv, Yahoo logos from 1994 till now, logoblink.com, May 11th 2012
Walter Frisk , The decline of Yahoo in its own words, HBR.org, June 2nd 2016
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