Yahoo! Are You?

For those who think Koogle, Singh, Rubenstein and Mallet is a law firm, Yahoo! (Nasdaq: YHOO) wants you to know otherwise.

This mighty quartet of international Internet business minds once helmed one of the most powerful new economy companies in the world. Now, all but one, chief operating officer Jeff Mallett, have resigned, and some industry observers believe it is only a matter of time before Mallett’s name magically disappears from the letterhead.

Today, only one name is carrying any weight within Yahoo!. That’s Terry Semel, late of the movie business, who was just formally introduced as the company’s new savior.

It’s been a few weeks since former chief executive officer Tim Koogle announced he would hand over the Yahoo! steering wheel. Koogle’s announcement came just five days after Canadian Yahoo! chief Mark Rubenstein resigned. Soon after, Anil Singh, chief sales and marketing officer and senior vice-president of operations, announced his retirement.

There are a number of crucial issues about the company’s viability in the marketplace, but first Semel will need to answer the one burning question that his predecessors failed to answer: What is Yahoo!?

Enter – Stage Right

Is it a media company? Is it a portal? Is it an e-commerce firm? Or is it all three, a triumvirate of electronic commercialism that tries to be all things to all users, until it settles on the one area that brings the most revenue?

While trying to decide, problems have developed for Yahoo!, highlighted by last month’s announcement that company earnings for Q1 of this year were US$7.6 million, or a penny per share, compared with $60.5 million, or 10 cents per share, one year earlier.

The plunge in fortunes has resulted in layoffs of 12 percent of the staff, as well as the high-profile executive departures.

For a company that has relied almost exclusively on advertising as a source of revenue, it appears that a clearly defined business model might be in order.

Y-Commerce

Although Yahoo’s future appears murky, one thing is somewhat clear. While Internet advertising indeed has a future, Yahoo! probably won’t be able to rely on ads for 85 percent of its revenues, as it has thus far. Yahoo! is going to have to sell something to consumers, a thought not lost on company strategists.

Already, Yahoo! is holding hands with Duet, an online subscription music service backed by Universal and Sony. And speaking of subscriptions, for less than $10 a month users can receive real-time stock quotes, news and analysis.

It appears Yahoo! has decided that consumer transactions are a nice new avenue. Mr. Semel might be more comfortable calling it a scene change.

Why Semel?

For those unfamiliar with Terry Semel, please know that his tenure with Warner Brothers goes back to the days when “Bonnie and Clyde” and “Deliverance” were still playing at the local movie house.

He’s a dyed-in-the-wool motion picture executive, who at 58 has suddenly decided it’s time to dive into the Internet.

Not long ago, he made some noise about doing something low-key connected with Internet investing. Suddenly he’s heading one of the Internet’s most acclaimed companies.

That leaves some observers scratching their heads and wondering why. Why Semel and why now? Why not someone who has been playing this particular game for a while and knows at least a fraction as much about Internet business as Semel knows about movie distribution and coddling stars?

One Man Band?

Those are good questions, but an even greater curiosity might have more to do with where Semel expects to round up his all-important team.

Since no one is touting the emergence of any superstars from within the Yahoo! organization, they will have to come from elsewhere.

Will they come from the movie business? Not likely. Not many movers and shakers from the motion picture industry are in a hurry to scale back their professional lives to the level necessary to succeed on the Internet.

There are few perks and no golden parachutes to be found online, and that is what most of them are used to. Limos, luxury and lots of options are still common in the movie business. Who among them will trade all that for a cab to the airport, a ride in coach and a future so unsure that when Koogle leaves, some wonder if Yahoo! will whither?

Yahoo! Productions

One thing Semel has been adamant about is that he is not coming on board to make Yahoo! an attractive prospect for a buyer.

That only leaves him one real road to profitability: diversification. Semel needs to find some bricks with which to associate Yahoo’s clicks.

Down the road, will we go to the local cinema to see Julia Roberts and Hugh Grant in a Yahoo! Pictures Production? Stranger things have happened.

One thing is almost certain, however: Yahoo! as a pure-play Internet contender is going to have to spread its wings into new territory to survive.

What do you think? Let’s talk about it.


Note: The opinions expressed by our columnists are their own and do not necessarily reflect the views of the E-Commerce Times or its management.


Leave a Comment

Please sign in to post or reply to a comment. New users create a free account.

Related Stories

LinuxInsider Channels