It’s always a bit poignant when a staple of an industry begins to struggle. Yahoo.com, or just Yahoo, has been a landmark of the internet for years. The fact that the site has been so well-known for more than a decade gives it distinguished status in the online realm. Perhaps it is simply time for Yahoo to fade gracefully from the forefront of search engines, or perhaps Yang, the Yahoo CEO, is to believed when he claims the future is bright for Yahoo – once they finish a much needed revamp.
Recent Events
In very recent news, Yahoo has announced substantial layoffs. 1,000 employees will be laid off in the near future, although some will have an opportunity to be rehired back into the company in a different area. The news about layoffs was no surprise following the rather dismal fourth quarter. On Tuesday, January 29, Yahoo announced after hours that profits of the fourth quarter of 2007 had fallen by almost 24%. The company also said the earning for 2008 would be below analysts’ estimates. On Tuesday evening, Yahoo’s stock immediately began to suffer.
When the markets opened Wednesday, Yahoo’s stocks fell to their lowest point since 2003. Shares of Yahoo were trading as low as $18.58, and closed at $19.05 for the day. Yahoo is still considered a stock to buy, but many analysts are cautious.
The Big Turnaround
Jerry Yang, the chief executive of Yahoo, made many comments recently to explain where he sees Yahoo heading. While he didn’t comment much on the events that have led to the company’s current position, he did have enthusiasm for the next few years. Yang plans to cut loose many of the business lines that are not profitable for the company such as the social network, photos and Podcasts.
Rather than try to continue stretching resources to cover a tremendous number of sectors and services, Yahoo will narrow its focus considerably. According to Yang, within a short period of time Yahoo will be highly focused on becoming a starting location for web patrons, making Yahoo a sought after marketing location for ads, and opening up the infrastructure of the site to third-party publishers and programmers.
The first step to develop this new narrow focus will be cutting positions that are no longer needed and bringing more attention to profitable sections of the site such as the mail, home page, My Yahoo features and news. Yahoo has already begun marketing efforts to become a serious player in the ad market with a partnership with AT&T. The partnership brings the company advertising revenues and new customers through mobile technology.
Is It Enough?
Yahoo investors have been discontent for some time as the site has encountered quite a few bumps in the road. The fourth quarter results and the estimates for next year are just two more large straws on the proverbial camel’s back. If the turnaround doesn’t go smoothly or the advertising revenues the company desperately seeks fail to realize, Yahoo may find itself in serious trouble. Only time will tell, and there is simply not much time left for the former industry giant according to investors.