Yahoo’s Indecisiveness Pays the Price

Yahoo that ruled the world of internet once met with an unfortunate fate

Yahoo

 

For almost a generation,Yahoo ruled the world that was new to the web and became the first port of contact. The new technology it developed was a hit star and the firm attained peaks within a very short time frame. With the course of time, the company that made its mark in the epoch of internet finally reached an anti-climax. Let’s travel back for a few years and see how Yahoo came up!

Foundation stone

Who do you think were the masterminds behind this whole concept? Were they highly experienced? Yang and Filo electrical engineering graduate students at Stanford University were its pioneers, and they created a website named “Jerry and David’s Guide to the World Wide Web” in January 1994. This site was a directory of other websites, organised in a hierarchy, as opposed to a searchable index of pages. Later, it was renamed “Yahoo” in March 1994.

Yahoo

Milestones

Right after the substratum laid by the graduate students of Stanford University, Yahoo was constantly at in a rising action throughout the 1990s. Just like the other web search engines and web directories, Yahoo added a web portal. Yahoo attained a star image and became the most popular starting point for web users by 1998. The profits of Yahoo only kept going with the high-profile acquisitions. The company’s stock price shot the sky during the dot-com bubble, closing at an all-time high of $118.75 on January 3, 2000.

Little tremors

With the bursting of the dot-com bubble, the company reached a very low point of $8.11 the very next year. This was the first ever tremor Yahoo ever felt since it emerged as a monopoly of the throne of the internet.

Yahoo developed its search technologies in 2004 after using Google for search in 2000. To withstand the fierce competition from Google’s Gmail, Yahoo offered unlimited email storage in 2007.

Microsoft Corporation made a voluntary offer of US$44.6 billion to acquire Yahoo in 2008. Yahoo calmly declined the offer claiming that it “substantially undervalues” the standards of the company. Ironically, three years later Yahoo had a market capitalization of US$22.24 billion.

Yahoo

 

Changing CEOs

Yahoo has been changing its CEOs constantly ever since 2009 in a hope to improvise the position of the company in the market. There was, however, no significant change in the deteriorating situation of the enterprise. In January 2009, Carol Bartz replaced Yang as CEO. Carol Bartz rendered her services as a CEO only till September 2011. The company’s chairperson Roy Bostock removed her and placed Company’s CFO Tim Morse as Interim CEO.

Right after the appointment of Scott Thompson as CEO in 2012, there was tittle-tattle about materialising layoffs. There was an acceleration in the resignations of key executives of the organisation. Followed by this, Yahoo announced a cut in about 14 percent of its 14,100 workers. These layoffs saved about US$375 million annually. Thompson completely reorganised the company and wrote in the email to his employees stating customers should come first.

Thompson’s role as a CEO ended on May 13, 2012, and Ross Levinsohn, the recently appointed head of Yahoo’s new Media group became the interim CEO. Thompson’s total indemnity for his 130-day tenure was $7.3 million.

Finally, Marissa Mayer was appointed President and CEO of Yahoo on July 16, 2012.

Yahoo

Yahoo Acquisitions in the recent years

In the view of widening its scope in the market, Yahoo made few acquisitions that it thought would benefit them. Under the guidance of CEO Marissa Mayer Yahoo snapped up 53 companies for a total of $2.3 billion. Out of these, two of them are considered the most significant acquisitions.

Yahoo regarded Tumblr as an important purchase and spent US$1.1 billion on it. The aim of acquiring Tumblr was to satisfy the company’s need for a flourishing social-networking and communications hub. The acquisition of Tumblr was announced officially on May 20.

Yahoo

The second important addition was that of a social web browser, RockMelt on August 2, 2013. As a result, applications and existing Web services of RockMelt were terminated on August 31.

In spite of the measures taken by the innovative minds of the firm, Yahoo could not reinvent itself.

Indecisiveness

One of the major factors that led to the anti-climax of the enterprise is the indecisiveness and its inability to identify the offer of golden geese. One of the very first mistakes of Yahoo was to turn down the offer the Google founders made to sell their technology. Yahoo rejected the offer as it wanted the users to spend more time on Yahoo. However, the Google search engine was designed in such a way that it would swiftly give the users the answers to their questions by redirecting to other relevant websites.

Secondly, the rejection of the offer made by Microsoft and its inefficiency to tap the resources of Tumblr correctly was another great mistake on their part.

Finally, Marisa Mayer who took the charge as CEO played her part in fuelling the downfall of Yahoo. Her strategy was aggressive and seemed perilous. Part of her rescue plan was stressing on growing the “MaVeNS” businesses—an odd acronym for mobile, video, native advertising, and social.

Clearly, this plan was not able to save the company from going into the hands of Verizon for a price that was lower than what was called “substantially undervalued” by its founders. The miscalculations it made are now the lessons from which other firms learn. Verizon bought Yahoo for just $4.8 billion and thus came the end of the great enterprise that stood as an inspiration for many others and once occupied the throne of the internet.