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by Stephen Logan on 5th January 2012
2011 was something of an annus horribilis for Yahoo. The once dominant search engine crumbled; eventually sacking embattled CEO Carol Bartz in September following a string of poor decisions and the emergence of some serious issues within the company – notably the incongruous relationship with Alibaba/Alipay. So what does the year ahead hold now that Scott Thompson has taken the reins?
The big question mark at the end of the previous year centred on the future of Yahoo and whether a buyout or merger were on the cards. With founder, and temporary CEO, Jerry Yang apparently seeking offers, speculation was rife about who the potential suitors may be. With the coming of a new year and a new leader, any such talks will now be put on the back burner. However, that isn’t to say that problems have ceased entirely.
We might only be five days into 2012, but speculation is already rife that Yahoo could be on the verge of selling its two major assets in Asia – Yahoo Japan and Alibaba. Reports suggest that this could net the former search giant a tidy $17 billion, providing vital funds to carry out any investments that the new management are looking to make to take the company forwards.
Advertising revenue is one area that needs serious work. Whilst Google has been able to capitalise fully on PPC and display advertising, Yahoo have slowly fallen off the pace. Whilst still a major source of income, particularly since the recent move towards developing content, there is plenty of room for improvement – something that the former Paypal man Thompson will be well aware of.
America remains a key market for Yahoo. Here in the UK, the search element of the company has dropped away to near insignificance, with the company only garnering a 2.5% share of the market. However, in the US they continue to enjoy a 15% share, which is significantly lower than it was previously, but shows that the company remains relevant and has a platform to build on – potentially.
Whilst they have invested in Premier League football highlights and a number of other ventures here, an injection of cash and development of existing properties may reap rewards. However, as a brand it has been tarnished. No longer a search engine since the collaboration with Microsoft, which led to the adoption of Bing, it is a company that needs a clear direction and purpose.
It may also be time to look at collaborations. With AOL throwing money at content, most notably the purchases of the Huffington Post and TechCrunch, the goals of the two companies appear to be merging. So, just as with Microsoft, it might be a better option to join forces than try to work against each other. A great deal though will depend on what the new management wants to do and how successfully plans can be implemented in the coming months and years.
Yahoo is a company with history and pedigree, but it is also a business on the slide. The stock price has recovered after the troubles in the lead up to Bartz’s departure, but it’s still down on previous levels – showing that the new CEO hasn’t lead to widespread optimism. Content is clearly the future and the potential for an increase in display advertising revenue is pretty clear. However, Yahoo has always been about potential and many have become used to the company failing to deliver.
As a search engine (or portal) it may well be finished here, with Bing likely to take over and Google in an imperious position at the top of the tree. In terms of the other parts of its business, well there is always going to be potential as long as they remain profitable. So 2012 is probably going to be pivotal, in one way or the other. I certainly wouldn’t like to suggest which way the coin will fall.