Yahoo Must Search For A Clear Focus, Analysts Say

Sep 7, 2011
Originally published on September 8, 2011 3:23 am

Yahoo's future is up in the air. Earlier this week, the Internet company's board of directors ousted its chief executive officer, Carol Bartz, who was hired two years ago to try to revitalize Yahoo.

Though it is still very profitable, Yahoo has been losing its relevance, and it is less clear where the company is headed.

Gregory Thune, an industrial designer in San Francisco, not far from the company's Sunnyvale campus, represents one of Yahoo's biggest problems: He's never once used Yahoo.

"I think I mistakenly landed on the Yahoo page maybe once in the last 10 years," Thune says. "But I get through my life and I answer the questions that I need to answer, and I search things ... without them. I don't even kind of know what they do anymore, honestly. I don't know what their main focus is."

And that, in a nutshell, is Yahoo's challenge.

A Quirky, Profitable Brand

Yahoo is tremendously old by Internet standards. It started 17 years ago, doing Web searches, and evolved into an online portal — a central place for accessing email, news and instant messages. Later, the company ventured into online entertainment.

Yahoo is an acronym. According to its official history, it stands for "Yet Another Hierarchical Officious Oracle." The name, like its corporate brand, was quirky by design. For a time, it advertised itself on television using what came to be a familiar yodel jingle.

The branding worked. The company is very profitable and generates more than $6 billion in annual revenue.

To this day, Yahoo has a gigantic Internet audience. According to comScore, a company that tracks Web traffic, Yahoo's monthly U.S. audience is still bigger than that of Microsoft or Facebook.

But it's slipping by other measures. Compared with three years ago, users spend less time on Yahoo sites, while time spent using Google and Facebook has increased.

Losing Sight Of Search

Analysts say Yahoo started to lose momentum when it took its focus off of search.

Tim Bajarin, a tech-industry analyst and futurist, says Yahoo tried to become a media company, a field where the competition was fierce and the money was not as good. Meanwhile, the company let other opportunities slip by.

If Yahoo wants a promising future, Bajarin says, it needs to find a leader who can help the company get back on track with what matters, and can make money.

"Whoever they bring in at this point, I believe, has to understand the new world of advertising and the new world of mobile, because that's where it's all headed," he says.

Bajarin says there are some things Yahoo still does well. It's still No. 2 in display ads that it serves up on other websites. Its finance, news and sports content sites are also very popular.

But if the company were to try to sell itself, it's not clear who would buy it.

Three years ago, Microsoft offered a hefty $45 billion to buy Yahoo. The deal fell through. Now, Yahoo is worth far less than half what Microsoft offered, and the two companies forged a search partnership that effectively gave Microsoft everything it wanted from Yahoo anyway.

Still, with a market value of $17 billion, the company is a pricey takeover target, which is why there is also talk that the company might break up into smaller pieces and sell off its Asian assets — including its share in Chinese search giant Alibaba and Yahoo Japan.

Yahoo said in its press release that the company is "evaluating possibilities and opportunities" but declined a request for additional comment.

Copyright 2018 NPR. To see more, visit http://www.npr.org/.

STEVE INSKEEP, host:

A major Internet company is looking for a new chief executive, as well as a new direction. Yahoo's board of directors ousted CEO Carol Bartz this week. She'd been hired just two years ago to revitalize the company. Yahoo is still very profitable, but seems less relevant in a fast-changing industry.

Here's NPR's Yuki Noguchi.

YUKI NOGUCHI: One of Yahoo's biggest problems is that there are people like Gregory Thune.

Mr. GREGORY THUNE (Industrial Designer): I think I've mistakenly landed on the Yahoo page maybe once in the past 10 years.

NOGUCHI: Thune works as an industrial designer in San Francisco, not far from the company's Sunnyvale campus. And he has never once used anything Yahoo.

Mr. THUNE: But I get through my life and I get answers that I need to answer. And I search things and I get answers without them. I don't even kind of know what they do anymore, honestly. Like, I don't know what their main focus is.

NOGUCHI: And that, in a nutshell, is Yahoo's challenge. Yahoo is tremendously old by Internet standards. It started 17 years ago doing Web search. It evolved into a Web portal, a central place for accessing email, news and instant messages. Then it ventured into online entertainment.

Yahoo is an acronym. According to its official history, it stands for Yet Another Hierarchical Officious Oracle, followed by an exclamation point. The name, like its corporate brand, was quirky by design. For a time, it advertised itself on television.

(Soundbite of a Yahoo advertisement)

Unidentified Man: (Yodeling) Yahoo-ooh.

NOGUCHI: The branding worked. It's very profitable and generates more than $6 billion in annual revenue. To this day, Yahoo has a gigantic Internet audience. According to comScore, which tracks Web traffic, Yahoo's monthly U.S. audience is still bigger than that of Microsoft or Facebook, but it's slipping by other measures. Compared to three years ago, users spend less time on Yahoo sites, while time spent using Google and Facebook has increased.

Analysts say Yahoo started to lose momentum when it took its focus off of search.

Mr. TIM BAJARIN (President, Creative Strategies, Inc.): They lost that opportunity.

NOGUCHI: Tim Bajarin is a tech-industry analyst and futurist. He says Yahoo tried to become a media company, where the competition was fierce and the money was not as good. Meanwhile, the company let other opportunities slip by.

If Yahoo wants a promising future, Bajarin says, it needs to find a leader who can help the company get back on track with what matters and can make them money.

Mr. BAJAR: Whoever they bring it at this point, I believe, has to understand the new world of advertising and the new world of mobile, because that's where it's all headed.

NOGUCHI: Bajarin says there are some things Yahoo still does well. It's still number two in display ads that it serves up on other Web sites. Its Finance, News and Sports sites are also very popular. But if the company were to try to sell itself, it's not clear who would buy it.

Three years ago, Microsoft offered a hefty $45 billion to buy Yahoo. The deal fell through. Now, Yahoo is worth far less than half what Microsoft offered, and the two companies forged a search partnership that effectively gave Microsoft everything it wanted from Yahoo, anyway.

Still, with a market value of $17 billion, the company is a pricey takeover target, which is why there's also talk that the company might break up into smaller pieces and sell off its Asian assets, including its share in Chinese search giant Alibaba and Yahoo Japan.

Yahoo said in its press release that the company is, quote, "evaluating possibilities and opportunities," but declined request for additional comment.

Yuki Noguchi, NPR News, Washington.

(Soundbite of music)

INSKEEP: It's MORNING EDITION, from NPR News. Transcript provided by NPR, Copyright NPR.