Yahoo Desperate To Stay Relevant

Just about every relevant Internet company is growing and hiring. Facebook can’t meet the demand fast enough. Google is giving all of its 23,000-plus employees a 10-percent salary increase in January.

And then there’s Yahoo. They’re slashing around 5 percent of their workforce, according to the Wall Street Journal, after considering as much as a 20 percent cut in their 7,000-person products group. This comes after the company already downsized in Q2 of 2009 and Q4 of 2008.

At the Web 2.0 Summit last month, Yahoo CEO Carol Bartz was forced to defend herself and her company, which has been in turnaround mode for years. A possible merger with Microsoft was scrapped in favor of cooperation between the two companies, and the current rumored merger between AOL and Yahoo seems to have fallen apart. Bartz also admitted that Yahoo “once strongly considered” buying Facebook for around $1 billion. Facebook’s worth today is estimated to be about $40 billion.

All of this comes at a time when Google, though rebuffed in its attempt to acquire Groupon, continues to thrive. (Yahoo failed at acquiring Groupon as well.) While Google and Yahoo were once bitter search rivals, Google has opened up an insurmountable lead by making a killing with its ad revenue. Its $187 billion valuation dwarfs Yahoo’s $22 billion market capitalization.

What’s more, Google has diversified its offerings more rapidly than Yahoo, getting into new lines of business via acquisitions and technology advances. Just recently, for example, Google re-cast the e-book market by opening its own huge e-Bookstore operation.

In fairness, Yahoo, which still depends on search for about half its business, is feverishly trying to reinvent itself. “We are content – that’s what we are,” Bartz claimed at the Web 2.0 Summit. To back that up, Yahoo acquired Associated Content last May. In November, it launched the Yahoo Contributor Network. According to Yahoo:

“The new platform invites all Yahoo users to become a part of the Yahoo experience by sharing their perspectives and expertise, and also lets Yahoo editors quickly and efficiently assign and select crowdsourced contributions for all of Yahoo’s media properties.”

Still, Yahoo has been late to the game in other respects. It lost its position in search and got out-maneuvered in social media. Not unlike AOL and MySpace, Yahoo was an Internet pioneer who may have either done too much too fast, or too little too late.

Yahoo may not even be worth as much as it appears to be on paper. The prevailing wisdom attributes Yahoo’s current high value to its Asian holdings, such as its 40 percent stake in the Chinese Alibaba Group. Yahoo Japan was always seen as a dominant player, but even it is losing its luster.  This month, Yahoo Japan began using Google’s search engine on its home page, according to the New York Times. Some believe that in order to survive, Yahoo may be forced to sell its Asian assets, reports the Times.

As Yahoo tries to extricate itself from an increasingly tight corner, it is also desperately trying to retain its relevance in an online market that has shifted under its feet. Perception is reality in this business. Right now, the perception is that Google and Facebook are hot properties – and Yahoo is old news.

About Barry Silverstein

Barry Silverstein is a freelance writer/marketing consultant. In addition to writing for ReveNews, he is a contributing writer to Brandchannel.com, the world’s leading online branding forum. He is the author of three marketing books, The Breakaway Brand (co-author, McGraw-Hill, 2005), Business-to-Business Internet Marketing (Maximum Press, 2003) and Internet Marketing for Technology Companies (Maximum Press, 2003). Barry ran his own Internet and direct marketing agency for twenty years. You can find Barry on Twitter @bdsilv.

5 Responses to Yahoo Desperate To Stay Relevant

  1. DanCall says:

    I have a feeling that if Yahoo had bought Facebook, Facebook would not now be worth $40 billion.

  2. bdsilv says:

    As an update, here's more news of potential Yahoo properties that are being shut down, which may include Buzz, AltaVista, Yahoo Bookmarks and others: http://money.cnn.com/2010/12/17/technology/yahoo_

  3. bdsilv says:

    As an update, here's more news of potential Yahoo properties that are being shut down, which may include Buzz, AltaVista, Yahoo Bookmarks and others: http://money.cnn.com/2010/12/17/technology/yahoo_