Yang's Departure Is No Panacea

• ByColin Gillis, RealMoney Contributor
• On 9:00 am EST, Tuesday November 18, 2008

While there is going to be much coverage of Jerry Yang's plans to step down as CEO of Yahoo! , the actual positive impact to the company in 2009 is likely to be slim.

The new CEO is still going to be faced with the same trap that Jerry faced -- a Web 1.0 leader struggling to stay relevant in a fragmenting Web 2.0 landscape. Purchasing AOL from Time Warner is not likely to improve this situation.

Here are a few key issues facing the company:

1. No clear sense of direction.

Why do we need Yahoo!?

For email? There are many options, including an arguably better product from Google . For chat? There is little distinction between the various instant message products. For finance? The company offers an excellent set of finance tools, but monetization is limited -- just look at same ads shown on the pages. For a starting point on the Web? The Internet is constantly fragmenting, and Yahoo! as a starting point less compelling. To socialize? Yahoo! clearly has missed out on this Web 2.0 trend.

If Yahoo! had compelling original content, it may better be able to keep its audience. If the company levered its broad reach and connections, it could serve as a social experience. One option is to acquire business network LinkedIn to jump-start its network approach.

2. The display advertising market is eroding.

Very little can be done about this except for providing advertisers a comparable experience to search by driving relevancy and delivering a competitive return on spend. The company also needs to deliver on the APT platform as promised.

3. Justify or spin off Asian assets.

A clear strategy for why Yahoo! maintains minority stakes in multiple Asian Internet companies is needed, and if there is no strategic reason for holding these positions, Yahoo! should turn them into cash.

4. Search is stable.

Be clear that search assets are not for sale. Search is going to be the jewel in 2009 as dollars flow to performance marketing.

While some may claim that a Microsoft takeout may be more clearly positioned as Yang steps down, it's worth again highlighting the reasons a full acquisition does not make sense. These include regulatory concerns, time and employee culture. (I go into greater detail in a previous column.)

So while Yahoo! shares may get a boost from the news of Jerry Yang stepping down, the fortunes of Yahoo! probably won't change significantly over the next year. A new CEO means that change is coming, but look to 2010 for the impact to materialize.

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Know what you own: Gillis mentions Internet companies. Other names in the industry include Baidu , Netease and Expedia .

Buzz up!