Yahoo – Another Disappearing Giant Has Nowhere To Hide

Yahoo – Another Disappearing Giant Has Nowhere To Hide

This week Yahoo announced it is spinning off the last of its Alibaba holdings.  This is a big deal, because it might well signal the end of Yahoo.

Yahoo created internet advertising.  Yahoo was once the #1 home page for browsers across America.  But the company has floundered for years, riddled with CEO problems, a contentious Board of Directors and no strategy for dealing with Google which overtook it in all markets.

mayer-yahoo

To much fanfare the Board hired Marissa Mayer, a Google wunderkind we were told, in July, 2012 to mount a serious turnaround. And during her leadership the company’s stock value has tripled – from about $14.50/share to about $43.50.  You would think investors would be thrilled and the company would be on the right track.

Only almost all that value creation was due to a stock investment made in 2005 – when Jerry Yang invested $1B to buy 40% of Alibaba.  And Alibaba in 2014 became the most valuable IPO in history.

Yahoo today is valued at about $46B.  The Alibaba shares being spun out are valued at between $40B and $44B.  Which means that after adjusting for the ownership in Yahoo Japan (valued at $2.3B) the core Yahoo ad and portal business is worth between $2B and $4.7B.  With just over $1B shares outstanding, that puts a value on Yahoo’s core business of between $2.00-$4.70/share – or about 1/6 to 1/3 the value when Ms. Mayer became CEO.

A highest value of $4.7B for the operating business of Yahoo puts it on par with Groupon.  And worth far less than competitors Google ($347B) and Facebook ($212B).  Even upstart, and often maligned, social media companies Twitter ($24B) and LinkedIn ($27B) have valuations 5 times Yahoo.

Unfortunately, this latest leader and her team haven’t been any more effective at improving the company’s business than previous regimes.  Under CEO Mayer Yahoo used gains from Alibaba’s valuation to invest about $2.1B in 49 outside companies – with $2B of that being acquisitions of technology companies Flurry ($200M), BrightRoll ($640M) and Tumblr ($1.1).  Under the most optimistic view of Yahoo, leadership spent 40% of the company’s value in acquisitions that have made no difference to ad revenues or profits.

In fact, Yahoo’s business revenues, and profits, have declined for 6 consecutive quarters.  Despite the CEO’s mandate that employees could no longer work from home.  A kerfuffle that proved yet another management distraction, and apparently an effort to cut staff without it looking like a layoff.

Meanwhile there have been big efforts to boost people going to the Yahoo portal. Such as hiring broadcaster Katie Couric to beef up the news section, and former New York Times tech columnist David Pogue to deepen tech coverage and New York Times Magazine political writer Matt Bai to draw in more readers.  But these have done nothing to move the needle.

Consistently declining display advertising has left search ads a bigger, and more profitable, business.  And while Yahoo’s CEO has been teasing ad agencies that she might begin another big brand campaign, including TV, to bring Yahoo more attention – and hopefully more advertisers – there is no evidence anyone cares as more and more dollars flow to “programmatic” ad buying where Google is king.  In the digital ad marketplace Google has 31% share, Facebook 7.75% share and Yahoo a meager 2.36% share.

Soon there will be little left of the once mighty Yahoo.  It has pretty much lost relevancy.  Large investors are crying for a merger with AOL, whose inability to grow its portal, ad and media businesses has left its market cap at a mere $3.7B.  But combining two companies that are market irrelevant, and declining, will probably have the same outcome as happened when merging KMart and Sears.  The Yahoo growth stall remains intact, and revenues will decline along with profits as the market continues shifting to powerful and growing competitors Google, Facebook and other social media companies.  Only now Yahoo’s leaders won’t have the Alibaba value mountain to hide behind

6 Best Apps for Business on the Go

If you're frequently on the go, then your smartphone or tablet is a simple tool that can keep you connected to work from virtually anywhere. However, your device is hardly useful without the right apps; consider downloading these top useful apps for business people on the go.
 

1. Dropbox

Dropbox image
 Image via Play.Google.com 

Dropbox  is perhaps the best data storage app available for mobile devices, and with over 50 million downloads, it's one of the most popular on the market. Using this app, users can access documents anywhere and from any device, similar to Apple’s iCloud. Use 2GB of free storage or upgrade to 16GB per account. Don’t worry about the security of important documents as this app features permission settings, account access information and a two-step verification process. You can store any file on Dropbox that you can store on your computer, making it convenient for any type of work. It's also easy to get extra space by recruiting friends and coworkers  to sign up for this app as well. 


2. Flipboard
Flipboard is a simple personalized news app that keeps you on top of the latest stories. With more than 10 million downloads, it's a popular app rated at 4.5 out of 5 stars on the PlayStore.  What makes Flipboard so great is that users can choose which topics the app should show, and then users can post their favorite stories in a "personal magazine" which can share these magazines on social media sites. With a syncing feature, users can access the news topics on any device.


3. Expensify

Expensify image
Image via Play.Google.com

Expensify  is a wonderful app for business people who travel frequently, consistently earning the number one spot on lists of the best apps for business travelers.  Expensify allows users to track expenses, log mileage, upload receipts with their device's camera, file expense reports and perform various other functions to make organizing business travel simple. Use this app on an iPhone, iPad, Android device, WebOS, or Blackberry device – and download it for free.


4. Google Hangouts
With a quality video chat app, you can easily stay in touch with colleagues and business partners no matter where you are. Available on PC, Android, and Apple devices, the Google Hangouts app  is easily accessible, making it simple to talk with other business people while users are out and about. It's free to use, allows multiple simultaneous conversations and with the right Internet provider users can collaborate with coworkers even if their offices are in a rural area.  Google Hangouts downside is the user base is still small.


5. Priority Matrix
Priority Matrix is a simple-to-use organizational app that can help users stay on top of all their business responsibilities. With it, users can:

  • Organize lists and agendas
  • Set target dates
  • Make a pro and con list
  • And more!

 

6. TripIt

Tripit image
Image via Play.Google.com

If you're a business person who travels often, TripIt  is a must-have app. TripIt links to a user's email account and automatically picks up trip confirmation numbers for any hotel, flight, or dinner reservation then organizes it into a simple itinerary. If users encounter last-minute changes or flight delays notified via email, the app automatically updates the itinerary.

Whether you travel often or just need to stay connected when you're away from work, these apps are excellent ways to make your life a bit easier.

This blog was written as a guest blog by Peyton Spencer.  I appreciate her insights into apps that can make all of our lives easier.

Peyton Spencer is a graduate of Concordia University in Saint Paul. She studied Communication with an emphasis on marketing and journalism. Her writing is featured on reputable blogs such as Dom's Tech Blog  and now The Phoenix Principle . In her spare time, Peyton loves experimenting with the newest technology, helping small businesses market their brand, and volunteering for non-profit organizations that are close to her heart such as Locks of Love, The Humane Society and Samaritan's Purse. 

Why Yahoo Investors Should Worry about Marissa Mayer

Marissa Mayer created a firestorm this week by issuing an email requiring all employees who work from home to begin daily commuting to Yahoo offices.  Some folks are saying this is going to be a blow to long-term employees, hamper productivity and will harm the company. Others are saying this will improve communications and cooperation, thin out unproductive employees and help Yahoo.

While there are arguments to be made on both sides, the issue is far simpler than many people make it out to be – and the implications for shareholders are downright scary.

Yahoo has been a strugging company for several years.  And the reason has nothing to do with its work from home policy.  Yahoo has lacked an effective strategy for a decade – and changing its work from home policy does nothing to fix that problem.

In the late 1990s almost every computer browser had Yahoo as its home page.  But Yahoo long ago lost its leadership position in content aggregation, search and ad placement.    Now, Yahoo is irrelevant.  It has no technology advantage, no product advantage and no market advantage.  It is so weak in all markets that its only value has been as a second competitor that keeps the market leader from being attacked as a monopolist! 

A series of CEOs have been unable to develop a new strategy for Yahoo to make it more like Amazon or Apple and less like – well, Yahoo.  With much fanfare Ms. Mayer was brought into the flailing company from Google, which is a market leader, to turn around Yahoo.  Only she's been on the job 7 months, and there still is no apparent strategy to return Yahoo to greatness. 

Instead, Ms. Mayer has delivered to investors a series of tactical decisions, such as changing the home page layout and now the work from home policy.  If tactical decisions alone could fix Yahoo Carol Bartz would have been a hero – instead of being pushed out by the Board in disgrace. 

Many leading pundits are enthused with CEO Mayer's decision to force all employees into offices.  They are saying she is "making the tough decisions" to "cut the corporate cost structure" and "push people to be more productive." Underlying this lies thinking that the employees are lazy and to blame for Yahoo's failure. 

Balderdash.  It's not employees' fault Yahoo, and Ms. Mayer, lack an effective strategy to earn a high return on their efforts. 

It isn't hard for a new CEO to change policies that make it harder for people to do their jobs – by cutting hours out of their day via commuting.  Or lowering productivity as they are forced into endless meetings that "enhance communication and cooperation." Or forcing them out of the company entirely with arcane work rules in a misguided effort to lower operating costs or overhead.  Any strategy-free CEO can do those sorts of things. 

Just look at how effective this approach was for

  • "Chainsaw" Al Dunlap at Scott Paper
  • "Fast Eddie" Lampert at Sears
  • Carol Bartz at Yahoo
  • Meg Whitman at HP
  • Brian Dunn at Best Buy
  • Gregory Rayburn at Hostess
  • Antonio Perez at Kodak

The the fact that some Yahoo employees work from home has nothing to do with the lack of strategy, innovation and growth at Yahoo.  That failure is due to leadership.  Bringing these employees into offices will only hurt morale, increase real estate costs and push out several valuable workers who have been diligently keeping afloat a severely damaged Yahoo ship. These employees, whether in an office or working at home, will not create a new strategy for Yahoo.  And bringing them into offices will not improve the strategy development or innovation processes. 

Regardless of anyone's personal opinions about working from home, it has been the trend for over a decade.  Work has changed dramatically the last 30 years, and increasingly productivity relies on having time, alone, to think and produce charts, graphs, documents, lines of code, letters, etc.  Technologies, from PCs to mobile devices and the software used on them (including communications applications like WebEx, Skype and other conferencing tools) make it possible for people to be as productive remotely as in person. Usually more productive removed from interruptions.

Taking advantage of this trend helps any company to hire better, and be more productive.  Going against this trend is simply foolish – regardless the intellectual arguments made to support such a decision. Apple fought the trend to PCs and almost failed.  When it wholesale adopted the trend to mobile, seriously reducing its commitment to PC markets, Apple flourished.  It is ALWAYS easier to succeed when you work with, and augment trends.  Fighting trends ALWAYS fails.

Yahoo investors have plenty to be worried about.  Yahoo doesn't need a "tough" CEO.  Yahoo needs a CEO with the insight to create, and implement, a new strategy.  And a series of tactical actions do not sum to a new strategy.  As importantly, the new strategy – and its implementation – needs to augment trends.  Not go against trends while demonstrating the clout of a new CEO. 

If you've been waiting to figure out if Ms. Mayer is the CEO that can make Yahoo a great company again, the answer is becoming clear.  She increasingly appears very unlikely to have what it takes.