Yahoo: Failures - Harvard University
Yahoo: FailuresJonathan Naveen Durga Saloni
WHAT A MESS !“ I just try to ship products that I’m not ashamed of ” – Jeff Bonforte, Senior VicePresident, Communication Products, Yahoo. (Dec. 1, 2015, New York Times)
What is Yahoo’s business model today?ValueProposition“ Portal for customer’s needs (search engine,email, news, weather, etc.)Creates value for advertisers with astreamlined, simple advertising technology ”RevenueModelRevenues come from display and searchadvertising (pay-per-click and banner ads)
Why is Yahoo failing?1. Lack of StrategicFocus No business line focusSearch vs advertising vsmedia vs investments No market segmentfocusattempted to serve alldemographics Didn’t play to winin a winners-take-allmarket2. Poor acquisitionsand deals Excessive reliance onacquisitionsinstead of organicgrowth Poor AcquisitionDecisionslack of synergies,integration, andstrategic fit paid toomuch Poor DealsPartnerships failed tomaximize Yahoo’sinterests (eg. Alipay,Mozilla)3. Poor CorporateGovernance Incompetent boardas pointed out byactivist shareholders Excessive CEO changes8 CEOs in the past 10years
20001999Yahoo’shumaneditorscouldn’tkeep upwith thesearchengine“Spider Bot”20001999AcquiresGeocitiesStockreachesall timehigh of 475Wentpublic1996Yahoois born19951994YangandFilocreatedsearchengineRaised nyothercompanies1999Timeline: GROWTH (1994 – 2000)
Stockcloses atan alltime low 8.11Yahootries toYahoobuylaunchesGoogleits ownfor 3Bn.searchGoogleenginedenied technologythe offerYahooinvested 1Bn ries to buyYahoo for 44.6BnYahoodeniedofferYahoo cofounder &CEO JerryYang stepsdown after18 months20092008200820072005200420022001Timeline: COMPLACENCY (2000 – 2010)Microsoftand Yahooagree tosearchpartnership
ry(mobile adcompany)for 200MMAcquiresPolyvore(onlineshoppingsite) for 230MM20162014AcquiresTumblr for 1.1Bn,Summly,andothers2014Sells halfof itsAlibabastake for ntedas CEO20132012ScottThompsonappointedas CEOfollowingdismissalof CarolBartz20122012Timeline: FAILURE (2011 – 2016)Statesthatcurrentstrategyis tofocus on“Search,Mail,Tumbler”
The decline of YahooGlobal Search Market Share (%)Yahoo vs Google%10080Google604020Yahoo02000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013“ the core Yahoo business is actually destroying value.It's possible that Marissa Mayer (Yahoo’s CEO) could increase her stock price by simply announcingthat she was shutting down all of Yahoo's websites and laying off all of its employees. ”– VOX Technology analysis
Recommendations for the future1. Focus only onkey strengths Decide on strategicfocus:Technology vsmedia vs VentureCapital Play to winSet goals, motivatepeople Move into adjacentmarkets later2. Only makeacquisitions thatmake strategicsense3. ImproveCorporateGovernance Have disciplinewhen pursuingacquisitions Make Board fullyaccountablefor CEOappointments Don’t overpay foracquisitions Choose the rightCEOwho has thenecessary skills Ensure integrationof acquisitions Make sure synergiescan be achievedthrough theacquisition Shareholderactivismserves as a checkand-balance againstBoard of Directors
Thank you!Jonathan Naveen Durga Saloni
ReferencesYahoo Financial Report 2015, files.shareholder.com, 2015Timothy B. Lee ,Yahoo is laying off 1,700 and putting itself up for sale, Vox,February 2, 2016, 5:50 p.m. ETWkipedia 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 2011Tony Hannidies, 12 Yahoo Services That Will Shut Down by September ,Lazy Tech Guyz, June 29th 2013Motley fool staff, Google stock: Buy it and hold it for life, fool.com,May 21st 2013Margarit Reliv, Yahoo logos from 1994 till now, logoblink.com, May 11th 2012Walter Frisk , The decline of Yahoo in its own words, HBR.org, June 2nd 2016
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 2008 Yahoo tries to buy Google for 3Bn. Google denied the offer 2009 Yahoo acquires many media companies Microsoft tries to buy Yahoo for 44.6Bn Yahoo denied offer .
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