How will Yahoo heal after Microsoft walked away?

Yahoo is a bleeding animal. Left lying, gasping for its breath, after a larger animal (Microsoft) struck and then walked away after it proved too difficult to eat. (That was just announced a few minutes ago).

How will Yahoo heal?

Some daunting challenges:

1. The perception itself that Yahoo is a wounded animal.
2. The bleeding of interesting employees, both due to layoffs as well as people just leaving to join stronger companies.
3. The trouble that it has keeping its search market share.
4. They started working on a deal with Google to sell its advertising. That’s going to prove tough to get through regulators and will cause public opinion to turn against Google, so I believe that Google deal will fall apart soon.

So, if you were in Yahoo now, what would you be doing?

Me? I would first rally the troops. Offer some real financial packages to key employees. Release a video tomorrow that explains why Yahoo believes it is worth $37 a share (people I talk with don’t believe it is).

But after that, how do you do the real work of regaining momentum? Think about college students. Would anyone want to go to work there this summer? Google and Facebook seem a lot cooler than working at Yahoo.

If Yahoo’s management can stop the bleeding and get up and start running again, it’ll be quite impressive. I just don’t know that it has enough life in it to do that. Plus, when Rocky and me heard the news (we were driving back from Maker’s Faire) we both looked at each other and said “shareholder lawsuits.”

The bleeding might just start to be apparent. Tonight I’m going to a dinner with a ton of CEOs and I’ll ask around what they would do.

Published by

Robert Scoble

As Startup Liaison for Rackspace, the Open Cloud Computing Company, Scoble travels the world looking for what's happening on the bleeding edge of technology for Rackspace's startup program. He's interviewed thousands of executives and technology innovators and reports what he learns in books ("The Age of Context," a book coauthored with Forbes author Shel Israel, has been released at http://amzn.to/AgeOfContext ), YouTube, and many social media sites where he's followed by millions of people. Best place to watch me is on Facebook at http://www.facebook.com/RobertScoble

Comments

  1. Yahoo must spruce up Yahoo Publisher Network (YPN = competitor to Google Adsense) and try to offer it more widely (also abroad of USA) and particularly context-targetting should be improved.

    It’s all about online advertising. Everything is secondary thing. This is the harsh reality.

    By the way: I wish Microsoft could at last take seriously Windows Mobile and offer Silverliglht and Mesh support also for Windows Mobile and stop treating Windows Mobile as 2nd class citizen. Is iPhone second class citizen? NO!

    Yes, Yahoo shareholders should start suing now Yahoo! The lost a lot of dosh.

  2. Yahoo must spruce up Yahoo Publisher Network (YPN = competitor to Google Adsense) and try to offer it more widely (also abroad of USA) and particularly context-targetting should be improved.

    It’s all about online advertising. Everything is secondary thing. This is the harsh reality.

    By the way: I wish Microsoft could at last take seriously Windows Mobile and offer Silverliglht and Mesh support also for Windows Mobile and stop treating Windows Mobile as 2nd class citizen. Is iPhone second class citizen? NO!

    Yes, Yahoo shareholders should start suing now Yahoo! The lost a lot of dosh.

  3. Currently Yahoo seems to be bleeding, but they can turn this around by utilizing some of of their acquisitions (mainly del.icio.us, flickr, Zimbra…) .

    As you said a video must be released but I dont think Yahoo has any clue what they will be contents of that, they have tried everything over the last few days and nothing seems to impress shareholders.

  4. Currently Yahoo seems to be bleeding, but they can turn this around by utilizing some of of their acquisitions (mainly del.icio.us, flickr, Zimbra…) .

    As you said a video must be released but I dont think Yahoo has any clue what they will be contents of that, they have tried everything over the last few days and nothing seems to impress shareholders.

  5. Microsoft is like IBM. It cannot innovate anymore. Yahoo shareholders should be happy that Yahoo can still breathe instead of dying inside Microsoft. In fact, the pundits are trying to spin as if Microsoft walked away. I would like to see this as Yahoo giving a middle finger to a bully called Microsoft. One year from now, Yahoo will be doing just fine while Microsoft will be gasping with other companies innovate away.

  6. Microsoft is like IBM. It cannot innovate anymore. Yahoo shareholders should be happy that Yahoo can still breathe instead of dying inside Microsoft. In fact, the pundits are trying to spin as if Microsoft walked away. I would like to see this as Yahoo giving a middle finger to a bully called Microsoft. One year from now, Yahoo will be doing just fine while Microsoft will be gasping with other companies innovate away.

  7. […] Scobleizer — Tech geek blogger » Blog Archive How will Yahoo heal after Microsoft walked away? « Yahoo is a bleeding animal. Left lying, gasping for its breath, after a larger animal (Microsoft) struck and then walked away after it proved too difficult to eat. (That was just announced a few minutes ago). […]

  8. I think they should send some real negotiators, not the founders. Why send Yang and Filo, unless you have no regard for shareholders and don’t want to see a deal done? Excuse me, but other people have money in this PUBLIC company.

  9. I think they should send some real negotiators, not the founders. Why send Yang and Filo, unless you have no regard for shareholders and don’t want to see a deal done? Excuse me, but other people have money in this PUBLIC company.

  10. @Krish:

    Nonsense. Have you seen the latest IBM mainframes? They run almost a hundred processors which can be a mix of mainframe Power processors, Intel, PowerPC, and theoretically anything else you want. They can run thousands of instances of any of these architectures in virtual machine mode, which is probably the greenest way possible to run a large multi-server datacenter. They run circles around anything Sun has, and are even capable of running Sun programs via emulation. They are working on systems with expected uptimes measured in YEARS. In many respects the PC world is no longer catching up with mainframes but falling further behind.

    I agree with you on Microsoft though. While they continue to do new work in their research division the products they talk about are either intended to compete with companies like Sony (that table form factor for example), or compete with Google (the telescope project). Nothing wrong with these things, but they fall more into the category of product development than research. As far as I know there are no fundamentally new concepts coming out of Microsoft Research. It doesn’t really seem to be a goal there.

  11. @Krish:

    Nonsense. Have you seen the latest IBM mainframes? They run almost a hundred processors which can be a mix of mainframe Power processors, Intel, PowerPC, and theoretically anything else you want. They can run thousands of instances of any of these architectures in virtual machine mode, which is probably the greenest way possible to run a large multi-server datacenter. They run circles around anything Sun has, and are even capable of running Sun programs via emulation. They are working on systems with expected uptimes measured in YEARS. In many respects the PC world is no longer catching up with mainframes but falling further behind.

    I agree with you on Microsoft though. While they continue to do new work in their research division the products they talk about are either intended to compete with companies like Sony (that table form factor for example), or compete with Google (the telescope project). Nothing wrong with these things, but they fall more into the category of product development than research. As far as I know there are no fundamentally new concepts coming out of Microsoft Research. It doesn’t really seem to be a goal there.

  12. […] Scoble calls Yahoo, “a bleeding animal. Left lying, gasping for its breath, after a larger animal (Microsoft) struck and then walked away after it proved too difficult to eat.”  He goes on to list daunting challenges.  They’re mostly perception–perception that Yahoo is a wounded animal, perception inside and outside that Yahoo isn’t worth the $37 Yang asked for.  But perception counts at a time like this.  It’s very hard to rally the troops if they think the leadership did the wrong thing.  […]

  13. Well the ultimate winner with the recent MS pullout is of course Google. Yahoo’s shares are going to go down like anything and like francine hardaway said, there are people who have invested in Yahoo because it is a public company and they are the ones who are going to suffer even more.

    Google’s shares are only going to get stronger by the minute and I think Microsoft did the right thing by pulling out. I guess the next time they offer to buy Yahoo, they’ll be bidding like what $16/share!?

    Yahoo! needs to get its act straight. First of all, they should try to enhance their search engine. The reason why Google rules the internet search and marketing world is only because of the number of people who use Google daily.

    Yahoo has a lot of audience with their flicker, yahoo mail, movies and other services, they just need to tune up their search results! There is a HUGE difference between Google and Yahoo’s search results. Also, they need to take YPN worldwide BUT, this could have been a better move had they done it 6 months ago. With MS pulling the plug on the possible MS,YAHOO deal, I don’t think Yahoo will have enough courage or resources to push YPN to international arena.

    For now, it does seem like Yahoo is in deep, deeeeep trouble!

    Just my two cents!

  14. Well the ultimate winner with the recent MS pullout is of course Google. Yahoo’s shares are going to go down like anything and like francine hardaway said, there are people who have invested in Yahoo because it is a public company and they are the ones who are going to suffer even more.

    Google’s shares are only going to get stronger by the minute and I think Microsoft did the right thing by pulling out. I guess the next time they offer to buy Yahoo, they’ll be bidding like what $16/share!?

    Yahoo! needs to get its act straight. First of all, they should try to enhance their search engine. The reason why Google rules the internet search and marketing world is only because of the number of people who use Google daily.

    Yahoo has a lot of audience with their flicker, yahoo mail, movies and other services, they just need to tune up their search results! There is a HUGE difference between Google and Yahoo’s search results. Also, they need to take YPN worldwide BUT, this could have been a better move had they done it 6 months ago. With MS pulling the plug on the possible MS,YAHOO deal, I don’t think Yahoo will have enough courage or resources to push YPN to international arena.

    For now, it does seem like Yahoo is in deep, deeeeep trouble!

    Just my two cents!