strategic-management

9
Yahoo! Inc. — 2009
Hamid Kazeroony
William Penn University
YHOO
www.yahoo.com
In January 2009, Carol Bartz replaced Jerry Yang as Yahoo!’s CEO. Yahoo! has resumed
discussions with Microsoft about search and advertising partnerships as both firms struggle
to compete with Google. Yahoo! in 2008 had rejected Microsoft’s unsolicited $44.6
billion offer and then rejected that firm’s attempt to acquire just Yahoo!’s Internet-search
business, which is second behind Google in market share.
Headquartered in Sunnyvale, California, Yahoo! has offices in more than 25 countries,
provinces, or territories. Yahoo!’s revenues from 2007 to 2008 increased by 3.4 percent
to $7.2 billion. However, net income decreased by 35.7 percent to $424 million.
Yahoo! is the second leading global Internet brand and one of the most trafficked Internet
destinations worldwide. Together with its owned and operated online properties and services,
it also provides its advertising offerings and access to Internet users beyond Yahoo!
through its distribution network of third-party entities, who have integrated its advertising
offerings into their Web sites. Yahoo! generates revenues by providing marketing services
to advertisers across hundreds of Web sites. Although many of the services Yahoo! provides
to users are free, it does charge fees for a range of premium services.
The core of Yahoo!’s strategy and operations is to become the starting point
for Internet users; to provide must-buy marketing solutions for the world’s largest advertisers;
and to deliver industry-leading open platforms that attract developers and publishers.
Yahoo! posted a 78 percent first quarter 2009 profit decline and reacted by eliminating
another 675 jobs, or 5 percent of its workforce on top of 2,500 jobs cut in 2008. For
that quarter, Yahoo!’s revenues dropped 13 percent to $1.58 billion. Yahoo!’s online advertising
business is also deteriorating rapidly as the firm’s overall revenue fell 13 percent in
the second quarter of 2009 compared to the prior year. For that second quarter, aggressive
cost cutting allowed Yahoo! to post a 7 percent increase in profit up to $141.4 million, but
the firm laid off another 700 employees to end with 13,000 employees.
In July 2009, Yahoo! closed its third video property, Maven Networks, based
in Cambridge, Massachusetts. Yahoo! plans to close twenty video services, including its social
network site Yahoo! 360 and its Web hosting service GeoCities. The company needs an excellent
strategic plan to negotiate a deal with Microsoft or to continue alone.
History
Yahoo! began as a student hobby and evolved into a global brand that has changed the
way people communicate with each other, find and access information, and purchase
things. The two founders of Yahoo!, David Filo and Jerry Yang, were PhD candidates in
electrical engineering at Stanford University when they started this company in a
campus trailer in 1994 as a way to keep track of their personal interests on the Internet.
Soon these two men were spending more time on their home-brewed lists of favorite
links than on their doctoral dissertations. Eventually, Jerry and David’s lists became too
long and unwieldy, and they broke them out into categories. When the categories
became too full, they developed subcategories and the core concept behind Yahoo!
was born.