MARKETWATCHTOPSTORIES Yahoo hopelessly stuck in second place
What's wrong with Yahoo?
Commentary: Search giant seems stuck as a runner-up
By John C. Dvorak
Last Update: 7/23/2010 2:15:00 PM
BERKELEY, Calif. (MarketWatch) -- Yahoo Inc. has been a baffling company since its inception. Actually it has become even more baffling since its inception.
The company (YHOO) is peopled with very sharp and intelligent folks who have plenty of real experience in the online world and elsewhere. It has a huge cadre of followers who managed to help the company do $1.6 billion in second-quarter revenues.
Yet the company is slightly screwy. Carol Bartz, the newest chief executive, has done nothing to change the fact that Yahoo has not been a leader in anything for at least 15 years.
Not that it doesn't try, or wish. At some deep level Yahoo is hopelessly clueless about, uh, well, everything. The fact that it is still in business has more to do with longevity and inertia more than anything else.
Everything it does is second rate, or when they buy a company they put it on a track to become second rate. When they develop or buy something that is not only first rate or fundamentally a world-beater, they have no clue as to how to market it.
The most interesting example of this is Yahoo Pipes, something that allows users to build complex structures by tying together various online services. If Yahoo put on a road show to promote this tool, they would be perceived as a leader.
But they commonly get into something and let it languish.
This curious habit of being No. 2 in everything you do is nothing new for the company. It's either No. 2 (rhymes with Yahoo) or it dumps project after project because nobody at the company can apparently see the potential for anything.
It buys Geocities, which could have easily morphed into modern blogs or even Facebook. Instead it let it languish and eventually die.
It has tried time after time to create other social-networking sites that soon are dumped for a new idea that is not better.
The company could have morphed half of its business into a real competitor to Craigslist, but instead let all its free advertising services deteriorate into a spammers heaven for people soliciting phone sex.
Its free mail system led the way for a moment, until Gmail came along and buried it overnight.
Yahoo even bought some credible search technology from some up-and-coming winners. In the end it still decided to use Microsoft (MSFT) Bing as its search engine.
I could seriously go on for two or three columns about this botch machine called Yahoo.
If any company in the history of business needed a major reorganization, it's Yahoo. But it's tried over and over and apparently it is an impossible task.
The board and shareholders hope that somehow Bartz can fix all this, but I don't see how.
Bartz's claim to fame was running AutoDesk Inc. (ADSK), a straight-up engineering development company. It was a company that was a leader in its field and a niche player in a large niche.
I personally do not see the connection between Autodesk and Yahoo that made Bartz a good fit. If Bartz was named CEO of IBM (IBM) it would make more sense to me.
In the go-go world of high tech there has to be a true visionary or uber-engineering genius at the top of these companies before the investors get excited. Functionaries do not carry the day. And nobody thinks any of them can envision an iPhone or world-beater idea of any sort.
So these companies make money, but the stock drifts. And unless the market is on fire, the drift is always down.