My Thinking on YHOO

Mike Arrington calls Yahoo!’s decision to partner with Google and finally walk from Microsoft a "Massive Destruction Of Shareholder Value, Employee Morale and Internet Balance Of Power" I don’t agree with that view and have stated my opinion about this deal on this blog since the day Microsoft started it’s hostile attempt to buy Yahoo! [YHOO]

Here’s my comment to Mike’s post:

Mike add me to that list of Jerry, Sue, and Tim [O’Reilly]

I’ve been rooting for this outcome since Microsoft first started
their effort to acquire Yahoo! It’s worth noting that at today’s
closing price, Yahoo! stock is trading about where it was a year ago
and above where it was at the start of the year.

The Microsoft hostile move backfired on Microsoft and pushed Yahoo!
closer to Google. Yahoo! finally woke up and did what they should have
done years ago, cede search monetization to Google who simply does it
better and will always do this era of search better than anyone else.

Now Yahoo! will do what it needs to do. Clean house, get lean, get
out of businesses it shouldn’t be in. Focus on what it’s good at. And
start making money and growing again.

They may need new leadership to do that. But selling this asset to
Microsoft just because they had the wrong leadership and probably still
have the wrong leadership is a mistake.

Imagine what the right CEO could do with Yahoo!

#stocks#VC & Technology

Comments (Archived):

  1. khylek

    When you say: “But selling this asset to Microsoft just because they had the wrong leadership and probably still have the wrong leadership is a mistake.”Are you referring to MS as the new wrong leadership, or are you saying the leadership (if it had stayed) would be bad?

    1. fredwilson

      I am saying that semel was not the right person to lead yhoo because he had the wrong view of what yahoo was and should beAnd jerry might not be the right person because he may not be up to the operational challenges that lay in front of yahooThat said, I think yahoo would fare better under jerry’s leadership, no matter how flawed, than ballmer’sFred

      1. khylek

        Thanks. Agree, fwiw.

      2. vruz

        I might add, the combined efforts of Decker and Yang are an entirely different thing.They proved they could pull a brilliant strategy when put under pressure.They should be more proactive and creative ? yes, no doubt about it. But the operative skills are there, I think.

  2. WayneMulligan

    I actually wanted to ask you about this at lunch today…yesterday you Twittered:” ‘Yahoo makes search and ad deal with Google worth up to $800 million.’ This is terrific news for YHOO, GOOG, and thw web”I can see how it’s good news for Yahoo! and for Google, but how is this good for the web? Having any single player control that much of a market has historically stifled competition. While Larry and Sergey are at the helm I can’t realistically see Google becoming “evil”, but what happens when they’re no longer calling the shots and the company still dominates the market?While the partnership isn’t “bad” news for the web as a whole, it should definitely give everyone cause for concern.

    1. fredwilson

      Technology works its way over time to bust up monopolies that are ‘evil’Look at what its doing to cable, wireless, microsoft, the record industryI don’t worry about google owning search. If they start messing around with us, we’ll switch to something that doesn’tFred

      1. WayneMulligan

        True, but look how long that took — and for companies that have Google deeply integrated into their value chain (big AdWords buyers or companies that derive a lot of revenue from AdSense), it’s easier said than done to simply “switch”.I guess I’m still trying to see how this was good for the web at large?-Wayne

        1. fredwilson

          Because google is hyperefficient at monetization and yahoo and microsoft is notAs tim orielly says, think of web apps (and google search is the biggest web app) as pieces of the open internet operating systemEach piece may ‘own’ its category but nobody owns the operating system and if the piece starts being suboptimal, it will get replaced over timeFred

      2. Don Jones

        Fred, if we took your comment about “If they start messing around with us, we’ll switch to something that doesn’t” and applied it to the wireless telecom world, it clearly doesn’t work.Since doing search at Google’s level requires massive investment in data centers and the top people to run them (sounds like massive investment in national wireless facilities and the people to run them), who ya gonna switch to?

        1. fredwilson

          Cloud computing is coming and that’s a game changer. Could google be sowing the seeds of its own demiseAnd I don’t agree with your statement on wireless carriers. GSM and number portability makes wireless carriers a commodityFred

  3. tim

    I was really confused by his post. I don’t know of a single person within Yahoo that -wants- to work for Microsoft. Matter of fact I find very few people outside of yahoo that want to work for Microsoft. Microsoft can’t even manage what it has today let alone something as large as Yahoo.

  4. Robert Seidman

    Arrington seems to hold Yahoo accountable for making sure “search” is a competitive space. I understand where he’s coming from but even if MSFT could’ve managed YHOO, the combination still wouldn’t really have competed with Google in search. Separately both companies failed spectacularly at it, what makes anyone think combining would’ve been successful?Yahoo has huge scale across all its properties and with the right leadership YHOO is still in an amazing position. Now that it’s clear it isn’t selling, I hope new leadership is in place pretty quickly. Sadly it seems the ability to do anything quickly is not among the skill set of current leadership, but like you, I don’t think that’s a reason to sell the asset.

  5. Joe Lazarus

    Fred, I agree that Yahoo! is better off avoiding the Microsoft acquisition. I also see the need for Yahoo! to get lean, cede the businesses they aren’t any good at, and focus on differentiated strengths. However, the details of the Google deal don’t align with that as far as I can tell. Jerry’s post on the deal suggests that he’s not ceding search monetization, but rather back-filling Yahoo! search ads with Google ads……He says a) they only plan to run Google ads for queries where Yahoo! has low coverage and b) that they plan to use Google’s money to reinvest in search monetization. Maybe that’s just a statement to avoid anti-competitive pressures, but if you take Jerry’s words at face value, he still intends to devote significant resources to search and is not freeing up resources to focus on other areas.This is the problem with Yahoo! in my opinion. They never seem to pick an area of focus. Instead, they try to compete in nearly every lucrative vertical on the web. If they were completely outsourcing search to Google so they could focus on other opportunities (or selling just search to Microsoft), I would support the deal. If they are just outsourcing tail terms, I don’t see how that frees up resources. What exactly are they focused on? Seems to me like they are still spreading their resources across search, content, social media, mobile, commerce, display ads, and every other attractive vertical under the sun. They’re spread thin like… uh, peanut butter.I hope things change. I hate Microsoft, but I still love Yahoo! It just pains me that they can’t seem to pick a direction for the company and commit to it fully. They’re still hedging their bets. I have no doubt that they can turn things around if they would just choose what they want to be when they grow up.

    1. willwhutson

      “Maybe that’s just a statement to avoid anti-competitive pressures”How could it be anything less? That’s a pretty bold statement to make with GOOG cutting a Y1 check near $500MM.

  6. willwhutson

    “Imagine what the right CEO could do with Yahoo!”Why do I feel people have been saying that about Yahoo! for years … oh because they have.I think a lot of what you said is true, leaning up operations, focusing the business, but cedeing search?They’ve invested a ton of cash into monetizing search – the stocks dip hasn’t reflected the real loss from this deal quite yet.Not to mention the grief Carl + his merry pirates will bring.

  7. vruz

    Few other companies have survived –let alone *strived*– after a Microsoft or Icahn takeover.Mike Arrington is dead wrong on this one.One would wonder what’s his rationale to support his case, given that Yahoo stock is about 20% up from 6 months before, have met all of their financial deadlines and have a promising deal with Google.The only reasonable point of view I can imagine is Mike is either a friend of Icahn or Ballmer, or he has stock he would like to profit from.Instead of attempting to rationalise irrational gut feeling, it would be much easier to say it plainly he just doesn’t like it.

    1. vruz

      by the way, this is just on CNN Money:”Yahoo shuns Microsoft and partners with Google”The company expects to generate between $250 to $450 million in operating cash flow once the deal gets the blessing of the Justice Department, which could take up to 3-1/2 months. The deal is expected to run up to ten years.……You can pretty much tell on which side of the equation Arrington is, as per CNN’s definition.

  8. Dan Lewis

    Here’s my thinking:Yahoo needed to concede defeat in the search market because it was killing them elsewhere. So this is good for the web, although bad for YHOO shareholders (because selling @ $33 is better than trading @ $24).My reasoning: Your YHOO link goes to Google Finance. Five years ago it would have gone to Yahoo! Finance. And that’s not (really) a search product.

    1. vruz

      except if selling at $33 guarantees you will dissappear from the market completely, one of the possible outcomes of a merger with Microsoft, a company widely known for their total inability to grok the Internet.

      1. Dan Lewis

        Selling at $33 guarantees that you disappear because, well, you sold 🙂 So I don’t see the post-acquisition business model being relevant to YYHOO shareholders, as they’d no longer be shareholders.(Yes, I’m ignoring the fact that 50% of their stock would be bought with MSFT stock.)

        1. vruz

          yes, you’re ignoring Microsoft stock has been a dead horse for quite a while now 🙂

          1. Dan Lewis

            So you sell it when you get it. Assuming a 25% loss of value on sale (which is ridiculous), you’re still getting $28.88 — which is almost 25% above what you’re getting now.

  9. Jeff Bonforte

    After 3 years at Yahoo! here are some of the things I would sell off/close:Autos, Personals, Pets, Real Estate, many international offices, answers, games, hotjobs, movies, music, OMG, Travel, TV, Yellow Pages, Shopping, Shine, Horoscopes, Weather, Small BusinessStuff I might keep: Sports, Finance (these are highly profitable homepages)Stuff I would invest in: Mail, Messenger, Mobile, Groups, Delicious, Flickr, Local/Maps, Search, My,, Buzz, display adsCompanies I would buy: Xobni ;), Disqus (for reasons different than you might think),Deals I would do: Google SearchDeals I would kill: AT&T and the other Carrier DealsIn the short term, it would hurt, and probably kill half of the revenue. But profit margins would be way up, and then the company could focus and start growing again.

    1. Joe Lazarus

      Jeff, I agree they could kill a bunch of those on your list, but I’d argue that it’s important for Yahoo! to think about this from a competencies perspective rather than on a property basis or by looking at their current market share numbers in each vertical. Consider Google’s succes as an example. Their strengths are in indexing information and offering algorithmic tools for searching / sorting through that data. They first applied those competencies to search & SEM, then later to other properties like maps and email. Apple excels at design and usability, which they can leverage across a number of verticals and devices.I was at Yahoo! roughly the same time as you, but frankly, I’m not clear what Yahoo!’s core competencies are (competencies as opposed to assets like Sports, Flickr, Mail, etc). The media properties are set up as content businesses that require editorial expertise and original content. Search is a technical business built on machines, data, and algorithms. Community sites require deep understanding of people and social interaction. Not only do these various divisions require unique competencies, but in many cases, the competencies are at odds with each other. For example, it’s hard to convince customers that you offer unbiased search when you also promote your own original content. I think Yahoo! can compete in any number of verticals, but they first need to identify what they hope to bring to those industries in terms of core competencies.I’m curious… why Disqus? I love the service. Just wondering what you would do with it at Yahoo!?

      1. Mark Collier

        Well Said, Joe.

      2. kaz

        Great comments from the XY!’s. Spending time at Yahoo! it’s hard to see comments like “focus on what it’s good at” and “imagine if they had the right CEO” and not get frustrated. As Joe mentioned, Yahoo still hasn’t decided what it wants to be when it grows up – and if Jerry (who’s been there since Day 1) doesn’t yet know that answer it’s hard to think of any outsider who will (personally I think they should have left Jeff Weiner decide but too late for that).Also per Joe’s comment about Yahoo needing to pick a competency I think they should go after the more social/community aspects – ultimately Yahoo! could/should be best at knowing what I’m up to and what I like on the web, ie: who do I contact the most via email, what topics am I most interested in via bookmarks, what movies did I recently see, who are my favorite sports teams, what are my recent statuses via IM, etc….and then help me find people/things I’d be interested in based on that past activity.Jerry and Sue should start watching reruns of Cheers and do whatever they can to turn Yahoo! into a place where everybody (you care about) knows your name.

    2. fredwilson

      You may be the man to run that company. That sounds damn close to right

  10. stone

    Yahoo lacks focus and it is a management issue. Where’s the accountability? Sue Decker and Terry Semel got wealthy beyond belief while Rome nearly burned to the ground. Yahoo is a very troubled company. The morale is below the floor. Their capitulation on search, especially after years of focus on Panama, is one of the biggest blunders in Internet history. They have failed in so many ways.

    1. vruz

      blunder how ?who says every company out there has to excel at search ???that’s just the wrongheaded idea Ballmer has tried to any case it’s a Microsoft capitulation more than a Yahoo capitulation.Semel who ?Semel is no longer on board as far as I know.Morale below the floor at Yahoo ? Have you checked morale at Microsoft ?Do you think bringing in the *lowest* morale ever will help Yahoo ?you’re so wrong it’s not even funny.

      1. stone

        Yahoo had hundreds of engineers working on Panama for 2+ years. Now they are outsourcing search to Google. This means that they wasted an incredible amount of money and resources on something that failed. They still *today* assert that search is key to their strategy. I just find it hard to believe anything that Sue or Jerry say these days.

        1. vruz

          you are new to the world of software and systems in general you know how high is the rate of failure in systems development ?failure is the NORM. you learn. you adjust. you move on.would you rather like them insisting in a failed strategy ?

        2. fredwilson

          They didn’t outsource search to google. They just gave google certain keywords that they monetize way better than yahoo doesFred

    2. fredwilson

      They still have a ton of traffic and a loyal audience which can be leveraged with the right team and the right strategy

      1. Dan Lewis

        That’s 100% right. Yahoo has a firehose of traffic — they just need a fireman.I remember reading somewhere, way back when, that Amazon tipped because Yahoo! made it the Yahoo! Site of the Day. I always wondered if Wikipedia could have happened 5x faster if it were given similar treatment.Imagine if Yahoo! had a stake in startup ecommerce sites (Zappos, or user-gen startups (Yelp) when they were still early-stage. Yahoo! provides the A-round and operational support and let the startup get the proof-of-concept up and running and the social infrastructure in place to handle traffic. Then Yahoo! steps in again, focusing it’s traffic hose on their investment.Search isn’t a part of that strategy, but cashing search out is. So I hope that’s where Yahoo! goes.

        1. Chris Dodge

          Sounds like you are proposing Yahoo turning into a sort-of startup incubator.

          1. vruz

            but Yahoo already has that too, and it’s called “Brickhouse”.it’s unclear what’s its current state since Salim Ismail left back in February.

      2. Darren Herman

        Fred, you’re dead on. They have one of the largest audiences online (if not the largest). Clean house (people), clean the slate, and put in people who know how to leverage audiences and focus on core competencies. There are tons of companies who would die for Yahoo!’s audience… it’s there for the taking…

  11. Jeremiah Jamison

    An interesting discussion, though I’d observe that beyond earlier AVC posts talking about letting the little apps (liek Delicious flourish), there’s little beyond the prescription of getting the right leadership in place. The fact is that the right leadership hasn’t been in place for near on a decade now, and I’d challenge whether that’s an acceptable answer.I worked at MSFT for 10 years, and have now left to be an entrepreneur. I understand the Anti-MSFT sentiment, but here I think this emotion has so clouded rationality that the discussion has become prettyRather than railing on Arrington, let’s pose a simple question…Who on this blog (author or commenters) would put a sizeable amount of the present net worth in YHOO stock? It’s cheap now, and by whatever thesis there is in the crowd here, you’d have to say there’s only one way for the stock to go, and that’s UP.No caveats that we get to wait for a Mark Hurd type (not that he’s the guy) to ride in and turn things around…Any takers? I’d be selling.

    1. Chris Dodge

      Jeremiah, I assume you meant “..has become petty” (not pretty)Fred, with terms like “regroup, refocus”, I think you are thinking through this situation as if Yahoo were a seed/early-stage company, in a similar manner to the types of companies that you invest in at USV. However, it’s a very mature and well capitalized company and I think some of this existential angst should have been dealt with a long time ago.I don’t have a dog in this fight, but I think if YHOO needs to re-group, get leaner, etc. there’s an implicit underlying statement that the market cap needs to continue it’s downward trend until some baseline valuation is established. Not that I have a clue what that should be. Seems like Yahoo is conceding that it’s indeed primarily a content & services company requiring a partnership (i.e. Google) to help on the revenue side. I don’t think that’s what has been pitched to investors for the last 10+ years, so there’s still some downward correction to occur.That said, I wouldn’t be surprised to see Yahoo go on an acquisition binge, which could be beneficial to the startup-community.

    2. fredwilson

      Good question jeremiahI’d rather have my money in startups, google, amazon, and appleFred

  12. Jon A.

    That said, I think yahoo would fare better under jerry’s leadership, no matter how flawed, than ballmer’sDespite all of Microsoft ‘s problems in putting together a winning online strategy, you’re underestimating the value of Microsoft’s OS monopoly, the strength of the .NET and Sliverlight platforms, and the company’s engineering strengths.Yahoo can build scalable and endearing web applications, but lack an obvious set of core competencies that enable it to succeed on its own. Management became bureaucratic and unfocused under Semel, with the former very hard to change. It’s hard to how Yahoo is going to win marketshare or mindshare in any category, given its shortcoming and this decision to effectively sign a contract that locks it into a secondary role relative to their main competitor.You’re right- Yahoo could have done amazing things with the right leadership- but that opportunity has been lost. It’s hard to see anything positive resulting from this outcome. The exodus of some of the best and brightest managers at Yahoo is the writing on the wall.

  13. Greg Solovyev

    Fred, I agree that Yahoo is better off independent and that this Google deal is better then MS deal. Yahoo also gets to have a head-to-head comparison of Google’s monetization performance to theirs which is good data. Maybe they will also put the data on a live screen in the break room where their ad platform guys work – just to keep reminding of the benchmark 😉 But what I do not understand is why Icahn is doing what he is doing if MS already walked away, and what are his chances to replace the board.

    1. fredwilson

      Icahn got in this because he sees a company that is not doing what its shareholders want. He’s not that different than a lawyer who files a class action suitHe may be right, and he may bring needed change, but I am pretty sure he doesn’t have a plan for yahoo long term

      1. Greg Solovyev

        Exactly, given that Icahn’s only strategy is to sell to Microsoft, I find it hard to believe that Icahn would spend so much to get control of Yahoo without making sure that Microsoft actually wants to buy it. Especially after they started unrolling alternative strategies for gaining search traffic. Getting back to your analogy – who is Icahn going to bill the attorney fees to? I don’t think it is over. I think Icahn is making a checkmate in three moves:1 – buy more YHOO when it sinks to the bottom2 – win the board3 – sell to MSFT for less than $30/shareIn order to execute this plan, both Balmer and Icahn need to make sure that everyone else thinks that Microsoft really-really does not want to buy Yahoo. Here’s how they are doing it: Icahn is trying to look nervous, to make other investors nervous and make them dump YHOO. Microsoft offered the search deal with Yahoo just to make sure they can say “we do not want to buy the whole company” one more time.

  14. gregorylent

    a lot of this is analyzing the waves, and missing the ocean … in this analogy the ocean is the flow of time … yahoo did its thing, embedded itself as the portal of choice for an internet generation, and time has moved on. i think it is wrong to expect things to live past their sell-by date, which every living entity has …it is more productive for society as a whole to shift energy to creation, as opposed to life support

    1. fredwilson

      I agree that its important to look forward, never backBut Yahoo!’s worldwide audience is 510mm monthly visitorsThat’s a huge percentage of the worldwide internet audience (>60%)It’s really important what happens to YahooFred

  15. edythe

    well said, Fred. Thank you. You see the bigger picture.”Now Yahoo! will do what it needs to do. Clean house, get lean, get out of businesses it shouldn’t be in. Focus on what it’s good at. And start making money and growing again.”

  16. wmfischer

    I agree, Fred, that the move might make tactical sense but strategically, I’m not so sure. Offline metaphors are dangerous since the web really is different. But, if News Corp [NWS] through its sales channel and ad inventory position could get higher effective rates than Viacom [VIA], should VIA offer up its inventory? Doesn’t this continue to weaken VIAs relative position?The web isn’t a zero-sum game, YHOOs inventory position is variable, taking more revenue with higher CPMs allows YHOO to invest in other aspects of their business — these elements could make a collection of tactics add up to a successful strategy. But I think this will undermine their overall advertising position since many of the dynamics that made it difficult for them to compete in search advertising will continue to make it difficult for them in display advertising.

    1. fredwilson

      Search and display advertising are different. Yahoo should focus on display where they have the leading exchange (right media), the most inventory, and a strong sales force. A marriage between yahoo and aol, for example, would create a display powerhouseFred

      1. wmfischer

        Agreed that there are differences between search and display. But I believe that the factors that contribute to GOOGs ability to achieve higher CPMs for search (massive base of advertisers, great contextual ad serving, good campaign management tools) will be utilized to build their display business. My concern is that the millions of businesses that might have used Panama for search and could be upsold into display will just focus on Adwords. That being said, they certainly took a run at building Panama and perhaps it’s time to punt. For first tier advertisers, I like the notion of combining AOL and YHOO.

      2. stone

        Fred, I know a little about this subject. I do not agree that there’s a large difference between performanced-based display and performance-based search. There are differences but if one entity is great at getting all the numerous variables right then it’s expected that they will get them right with other ad formats, channels or targeting methods. There’s no evidence that Yahoo is good at any of the performance-based systems. This is partially why they bought Right Media. Here’s the problem: all the great people are leaving or have left Right Media. You have directly benefitted as have I. They don’t have their good tech/product folks anymore. They are now left with the folks that couldn’t get Panama right. They will not be a major player in display 5 years from now except for their own inventory. Google will erode their share as they did in the text world. Yahoo doesn’t have a text ad network anymore. It has been completely decimated.

  17. Sam

    Good comment. One wonders sometimes if he means any of these ridiculous things he says, or if he’s simply trying to promote his own empty brand with a bit of easy controversy.

  18. charlie crystle

    Yahoo should continue to build out its web services and APIs. But I can see it getting into mass market software successfully. It has the web services platform, has a desktop platform, and can connect the two for deeper value add and better performance than any browser app.They don’t just eyeballs, they have thousands of niche market segments organized nicely into groups, and could easily build software that helps each of those niches and market to them, and literally out-niche Microsoft, Google, etc. Semel was terrible–looked at Yahoo as an entertainment platform. But it has the best local search of the giants, best segmentation through groups, and quite a robust set of APIs and web services. With Yahoo, I’d own the small business space/SOHO market.

    1. fredwilson

      That’s one of many good ideas I have heard in recent weeksThere is no reason for yahoo to throw in the towelThey just need to put a strategy in place that plays to their strengths andgo execute itfred

      1. stone

        Yahoo has had several different strategies even since Jerry took over as CEO. Go read the conference call transacripts and public emails sent by Jerry since he took the CEO role. You will see that they change their tune every 3-4 months. The first conference call after Terry left was all about their re-dedication to Search. The next one was about their advertising assets and their foray into display. The third conference call is where they hit us with their desire to be the “start page” for the web. Now they are saying they are focused on Search, Mobile, Community and “take your pick”.Can anyone articulate Yahoo’s strategy? Not what you think it should be but what it actually is? Can anyone tell me what Sue Decker’s vision for the company is? Can anyone tell me what she’s good at? Does she have great product vision?I agree that the MSN/YHOO deal was a disasterous idea but I also think that Yahoo’s current management team — the folks that brought us Panama — need to leave the company in order for Yahoo to be fixed. What has Sue and Jerry done since the Peanut Butter Manifesto? Answer: not enough.

  19. glemak

    looking at mr. icahn’s background though he has shown himself to not be altruistic but rather opportunistic, yes he believes he can take advantage of troubled companies/boards but always for his own personal gain (either financial or egotistical) if his actions also happen to help other shareholders that’s just collateral damage (in a positive way for those shareholders of course) – he is not an expert media industry operator though even though he’s bullied himself into numerous media related companies before, his expertise is in being a corporate raider, carpetbagger & sleazeball based on his actions and associations throughout his life 🙂

  20. gregory

    i am reading with a very fast connection … skim halfway down the page …and the right hand column finally loads, and jumps me up to the top againwonder why

    1. fredwilson

      My blog is fubarred

      1. tweetip

        “My blog is fubarred”fred – that’s too funny :))) lol

        1. fredwilson

          It’s sad actually

  21. gregorylent

    i think they are in maintenance mode … got 500 million on board, lot of parts are leaking, and plugging em up is taking most of the work week … three separate smaller companies would be much better

    1. fredwilson

      Agreed. That’s what I’ve been saying. Break up the company. Don’t sell it

      1. TedMurphy

        They should certainly sell or spin off the Asian properties. That’s $7.24 per Yahoo! share just in the publicly valued and Yahoo Japan. Their position in Alibaba Group could be worth another $2.53 (my guess).

  22. Se7en

    Great perspective on the issue, thanks for the article.I’m a bit puzzled by Techcrunch’s escalating rhetoric and mounting hysteria about this issue. Its a big deal, but they are blowing it way out of proportion with their warnings of impending doom for the Net. I notice today they have continued the rant with more new articles about it.One has to wonder why Techcrunch is so emotionally involved in this deal-unless of course they have a lot of stock riding on it :p

    1. stone

      Michael Arrington will do whatever it takes to drive page views. I find most of his rants to be off the mark. His eye for a good start-up has always been suspect. His investments all seem to have failed. He has no rules — anyone that watches him knows this. He even admits to looking at commentors IP addresses to discern who they are or where they are from. This all leads to me not thinking he has much credibility so I discount everything he says as if it all came from ValleyWag.

  23. Steve

    All well and good…but with Yahoo ceding control of their main product (ad revenue on search and its content aggregation), what exactly is the business that they are left with? To me, it is as if Target decides to outsource its retail operation to Walmart and industry pundits saying “…clean house, get lean, get out of businesses it shouldn’t be in. Focus on what it’s good at. And start making money and growing again…” Not to be disrespectful, where should they go from here?

    1. stone

      Steve, you hit the nail on the head my friend. People seem to miss the point here. This isn’t some ancillary business that they decided to exit, it has been their core mission (panama) for the last few years so says Sue Decker and Jerry Yang. I don’t care that it’s only certain search queries. That also misses the point in my mind. How does Yahoo credibly talk to publishers about monetizing their inventory going forward? If they come to me I’m going to ask why they failed in search and why I should believe they are much better with content pages than search. What is the answer going to be? I’d like someone to attempt that answer. It puts their entire display/exchange business in jeopardy, especially when Google and DoubleClick walk into publishers with bundled solutions and clever ways to leverage their expertise in search to monetize display inventory. Yahoo loses that sale 80% of the time, mark my words.

  24. joe hunkins

    What did you and Tim O have for lunch, hallucinogens? You correctly note Yahoo’s leadership challenges but like the one option here that keeps the board intact and on track for more of the same company crushing behavior. Clean house? Not going to happen *now*.It seems to me there are two issues and you guys are wrong on both counts where Arrington’s got it right.First, Yahoo’s Google move proved that in terms of shareholder obligations it should have sold to MS. Yahoo cannot reasonably make a case that they will come out of the monetization hole using core values and then outsource your most lucrative biz to Google. Are you saying there is a Googley path back to $34+ per share? Nonsense.Second, this just gives Google even more of a near monopoly on monetization. As Mike suggests competiton is lacking and needed in the search space. This is a big step in the wrong direction.But maybe I’m just a bitter shareholder…..maybe just give me some of what you and Tim are having for lunch?

    1. fredwilson

      I like Œwhichcraft and shake shack for lunch. Not sure where tim eats lunch.I think we just see the world differently than you and Mike do.The great thing is we will know in a couple years who was rightfred

  25. Varun Dube

    Fred, I agree with your post to some extent. I see this more like a begining of a street fight which is out there in Open. In my blogpost I have talked more about this …See if you get a chance.

  26. Bob Warfield

    I agree on the new CEO. What you’re describing as that CEO’s course of action is exactly on target. What Yahoo needs is another Mark Hurd.See my blog for more:http://smoothspan.wordpress…Cheers,BW

  27. edythe

    arrington is wrong about employee morale. i work at Y!SM and morale is not low.