Marissa Mayer’s reign as head of Yahoo looks to be ending like her predecessors. With a serious flop. Only this may well be the last flop – and the end of the internet pioneer.
It didn’t have to happen this way, but another CEO’s inability to manage Status Quo Risk doomed Ms. Mayer – as it has too many others. And once again bad leadership will see a lot of people – investors, employees and even customers – pay the price.
Yahoo was in big trouble when Ms. Mayer arrived.
Growth had stalled, and its market was being chopped up by Google and Facebook. Its very relevancy was questionable as people no longer needed news consolidation sites – which had ended AOL, for example – and search with its ad placements had long gone to Google. Active internet users were already clearly mobile social media fans, and Yahoo simply did not compete in that space.
In other words, Yahoo desperately needed a change of direction and an entirely new strategy the day Ms. Mayer showed up. Only, unfortunately, she didn’t provide either. Instead Ms. Meyer offered, at best, a series of fairly meaningless tactical actions. Changing Yahoo’s home page layout, cancelling the company’s work-from-home policy and hiring Katie Couric, amidst a string of meaningless and questionable acquisitions,were the business equivalent of CEO fiddling while Rome burned. Tinkering with the tactics of an outdated success formula simply ignored the fact that Yahoo was already well on the road to irrelevancy and needed to change, dramatically, quickly.
The saving grace for Yahoo was when Alibaba went public. Suddenly a long-ago decision to invest in the Chinese company created a vast valuation increase for Yahoo. This was the opportunity of a lifetime to shift the business fast and hard into something new, different and much more relevant than the worn out Yahoo strategy. But, unfortunately,Ms. Mayer used this as a curtain to hide the crumbling former internet leader. She did nothing to make Yahoo relevant, as fights erupted over how to carve up the Alibaba windfall.
When it became public that Ms. Mayer had hired famed strategy firm McKinsey & Co. to decide what businesses to close in its next “restructuring” it lit up the internet with cries to possibly just get rid of the whole thing! After three years, and more than one layoff, it now appears that Ms. Mayer has no better idea for creating value out of Yahoo thandoing another big layoff to, once again, improve “focus on core offerings.” Additional layoffs, after three years of declining sales, is not the way to grow and increase shareholder value.
Things are worse now than then – much worse.
Analysts are pointing out that Yahoo’s core business today is valueless. The company is valued at less than its remaining Alibaba stake. And this is not outrageous, since in the ad world Yahoo has become nearly irrelevant. Nobody would build an on-line ad campaign ignoring Google or Facebook and other internet leaders. But ignoring Yahoo as a media option is increasingly common.
Investors are rightly worried that the IRS will take much of the remaining Alibaba value as taxes in any spinoff, leaving them with far less money. Giving up on the CEO, and its increasingly irrelevant “core business,” they are asking if it wouldn’t be smarter to sell what we think of as Yahoo to Softbank so the Japanese company can obtain the rest of Yahoo Japan it does not already own. Ostensibly then Yahoo as it is known in the USA could simply start disappearing – like AOL and all the other on-line news consolidators.