Yahoo Said to Start Approaching Possible Bidders Soon As Monday
bloomberg.com
bloomberg.com
Why not just build an entire lifestyle company around this? Yahoo Internet TV, Yahoo Banking, Yahoo Insurance, Yahoo Real Estate, etc. It might not make Wall Street happy because they're not growing 20% YoY but they would become a one-stop shop for everything a person would need on the Internet, and they can capture a lot of stickiness that way. They tried that to a certain degree but never to the amount of commitment that would make it stick. I think they should double-down and get things like banking and insurance in there, as well, so that people who need to pay bills, etc, will all use the same site.
And keep throwing shit on the wall and see what sticks, maybe they do come up with something that revitalizes them like an iPhone.
But their brand is the most valuable thing about them now, why not just expand horizontally into slower-growth but ultimately profitable businesses?
Yahoo's been throwing shit on the wall for a long time, and nothing's been sticking. It's no wonder investors are starting to lose their patience.
But this would never impress investors who are looking for insane returns. As a result, they're taking everyone down with them.
http://www.businessinsider.com/marissa-mayer-biography-2013-...
Relevant quote:
He wanted it to stop competing with technology businesses like Google and Microsoft and focus entirely on competing with media and content businesses like Disney, Time Warner, and News Corporation. As part of this transition, Levinsohn wanted to spin off, sell, or shut down several Yahoo business units. He said doing so would reduce Yahoo’s head count by as many as 10,000 employees, and increase its earnings before taxes and interest by as much as 50 percent.
The full article is fascinating as to how they made this critical decision.
They had yahoo answers before Quora got popular, they had tumblr, yahoo sports, etc., all of which were market leaders at some point in time but in the end all the potential got wasted due to the direction the company took.
However, just like the fail fast & learn, I dont think she will, nor should, pay a permanent price for this as she is actually a much smarter executive from that experience.
The problem with yahoo has always been well understood, no one knows what the fuck it is. It provides some value to a lot of different groups of people. It came out of Mayer's tenure looking the same way, a big company with a lot of pretty good things centralized in a disjointed way which was a missed opportunity.
Yahoo finance should have been broken into a stand alone site and become an investing portal selling side services to people and market data to others.
Yahoo should have restructured as a news organization and retooled the UI to look like bloomberg.
Fantasy sports should have been split out into a business and either sold to, or transformed into draft kings, etc.
Search engine actually quite valuable if it isnt someone elses results rebranded.
Correct. This is just a job. If she gave it her best and more and they fail, then that is just outside her hands.
Edit. no one knows what the fuck it is
Correct again. Apple:iPhone/Mobile. Google:Search. Microsoft:Windows/Software/PC. Facebook: Connection/Address Book. Wikipedia:Encyclopedia. Yahoo and Twitter, while very useful to millions, suffer the same problem.
The thing about twitter is that it has 1/2 of the problems of yahoo, it is pretty well defined as a communication channel and more specifically it is a one to many broadcast channel. It doesn't know how to financially capture value.
Twitter is pretty interesting in that the arbitrary SMS length of 140ish char is pretty interesting from a data standpoint as it ends up playing sort of like XML. Pretty much the way to use data online is that we use 1960s IBM doc authoring language, it got a few tags and some sugar in the late 80s/90s but in reality we add meta tags to meta tags and then read this data. Twitter, due to the char limit actually provides dynamic labels to realtime information flows in a way that is comprehensible programatically.
e.g. <p>Some info</p> is not particularly helpful as the entire <article> and accompanying data needs to be parsed and looked at, and always varies from site to site.
However: In #election2016, I voted for #Trump. Data labels can mirror trends in human readable form and computer processed form. So in the above example, from @example you could state:
Public Opinion of Trump +1
@example is a complete moron.
So it actually ends up playing like a paradigm shift from sql to nosql data in terms of data streams.
1. She was worth less than they thought when they brought her in. They paid for someone they thought could solve their problems, and she could not.
2. She's worth more now than she was when they hired her, because she does have more experience (this point I agree on).
This means, to me that she's worth somewhere between "what she was really worth when they hired her" and "that amount plus the value she gained by learning".
Given the decisions I saw her make (no remote work, basically firing anyone that wanted to continue their remote work), I'd say she was worth a lot less than they thought she was when she started... and worth a lot less now, even with new experiences.
So IMO Yahoo's problem isn't that no one knows what the fuck it is, but that it's really a Big Media conglomerate that happens to specialise in the Internet, rather than an Internet search company that happens to do media but isn't really sure why.
Mayer half understood this, but her Google experience didn't give her the background, the experience, or the insight to make it work. She seems to have tackled it as a top-down engineering (mobile!) and people management problem, instead of leaving the various divisions to invent their own best profitability strategies.
I don't know - maybe the board would have done better with a former Viacom exec, or someone with a similar background.
True in a sense. I would frame it that the media world is the internet and there are many channels on it.
Larger organizations have fared quite poorly in this environment, especially in a non specialized space reaching consumers.
Bloomberg is a data & tech company with a fairly specialized clientele for their media. Without viewing there financials I would assume cap iq and the terminal data feed dwarf the media arm.
So my poiny above was that adapting Yahoo finance to serve as a consumerized version of Bloomberg, and cross sell data to finance companies viaban APO would have been helpful.
The sports media and application ecosystem looks like fanduel & sbnatition.
The mail service not sure what to do with maybe keep it in the yahoo ecosystem on main.
So viacom not phenomenal vs tech executive
Nice job if you can get it. You don't even need to be accountable!
* Yahoo would sell the core "Yahoo" piece or businesses components leaving the new Yahoo as just a shell company with just BABA holdings. Essentially, they decouple it entirely.
* Yahoo's components would be sold and then BABA would almost certainly purchase all of the Yahoo stock, which would just be, in reality, a stock buy back from their standpoint.
* The actual Yahoo components would go to whoever bought them, but likely not to BABA.
Not sure how this plays, but it doesn't seem like anyone smart realizes Yahoo core is valuable, or at least has not been publicly announced as a suitor. It does not seem feasible to recap the company in reverse, selling BABA and betting on itself, although I think that is the move personally.
The result currently appears that BABA does a stock rebuy and Yahoo disappears entirely. The employees acquihired slowly look for better jobs over the next year as they work with the acquirer to destroy yahoo by integrateding it into whatever piece of shit idea some executive has.
Basically, cash for any of the BABA shares means they take a big tax hit. Share deals could maybe avoid this (which is what the "activist" investors are pushing for) but would need regulatory approval and likely to sell or close down the rest of the company.
She was not a destroyer who came in to trim down to the appropriate level, she was the creator expected to raise them to new heights with all kinds of new ventures and projects.
Regarding the core business, we're in an era where markets are becoming more winner-take-all meaning scale is your network effect and there are huge gaps between 2nd or 3rd place and the rest. This is especially true in ad tech and ad supported businesses (Facebook, Google, and the rest). From this perspective, Yahoo core is probably hugely more valuable to Verizon or another massive company who can credibly challenge Facebook and Google, than it would be by itself.
The reason the market values Core Yahoo negative, is because it thinks the current management will destroy capital by spending it on useless acquisitions and costly R&D to become a growth company again.
But accepting that it is a stable company that's going to bring in billions in revenue for years, and just milking it dry is actually not a bad strategy. It's a very boring strategy though.
Yahoo has plenty of smart people itching to do the right thing.
A Yahoo with a declining profit margin and market share is worth less in terms of any likely future dividend. So the share price drops accordingly. Normally, this would make it more likely for an outsider to purchase the company as those that bought at the higher price would be willing to see either a small loss or a small profit (depending on when they bought) and close out their position. The purchaser could then sell the pieces or merge with another company or do something to get more revenue later on.
What complicates all this is the shares that Yahoo has in BABA and Yahoo Japan, which set a hard floor on the stock price (and lowers the potential upside for any acquisition, making it hard to find buyers for the whole company). However, they can't just sell out of those positions and pay off some existing investors and/or buy shares, as they would have to pay a hefty tax fee and probably tank the stock price as it tried to find a new floor.
One potential way out of this would be to find a way to kickstart the company growth so it would be valuable enough that investors would hang onto it. That hasn't worked. Another way is to try and just spin off the BABA shares into another company, give those to some investors so they can close out their positions with a profit, and the remaining investors can focus on the business. That got nixxed by the IRS.
So they're basically stuck doing the same chop shop deal that a "corporate raider" might pull, only while taking a huge PR hit and a hit to morale because they're supposed to be the "good guys". Not some "outsider" pulling a hostile takeover.
Clearly marketing and engineering both were strengths here but I strongly feel they lost the control of engineering side. They probably did not invest in tech leadership that was required. This is a sinking ship and can not be turned around.
So if it's not public, why are they making it public by talking to the press? What do people get in exchange for leaking information like this? I've always wondered.
In that way it's a bit like the lobbying dynamic.
[1]: http://www.mercurynews.com/business/ci_28661223/ex-yahoo-emp...
At the time when they were looking, I wrote Jerry an open letter about what I thought could be done. Sure I'm a nobody, but none of the ideas were even, through the chances of good business, implemented. Instead there was a fancy rebranding, and a targeting of women's lifestyle channels. And now this.
I'm glad we have a competitive economy, or else I could imagine Yahoo becoming the service that sucked, but that everyone still used.