Yahoo is experiencing a mid-life crisis
DIEGO LUNA | BUSINESS EDITOR | THE USD VISTA | @diegotothemoon
The once dominating search engine Yahoo is in the process of being acquired by another tech giant. Although it is not yet clear who that might be, Yahoo still has not found a clear path toward a successful turnaround strategy.
Yahoo was founded in 1994. Despite the fact that they began their operations in the beginning stages of the internet boom, it is now ancient by internet standards.
According to comScore, an internet analytics company, Yahoo sites are the third-most trafficked sites on the web. Internet traffic is simply the flow of data across the web. These Yahoo sites include Yahoo Finance, News, Search, Mail, Tumblr, and Flickr.
Students at the University of San Diego share their thoughts on Yahoo’s current state of affairs.
Junior Max Cardinale is a marketing major and explains why he no longer uses Yahoo’s services.
“Yeah, I remember that annoying Yahoo jingle,” Cardinale said. “Honestly, how many people use Yahoo as their search engine? I only used Yahoo when I set up my first email like 10 years ago.”
On that same note, there are skeptics that think Yahoo lacks purpose.
Matt McAlister is a current contract author for The Guardian Newspaper and ex-Yahoo employee. McAlister explains Yahoo’s central problem.
“Yahoo has a soul problem, nobody knows what it stands for,” McAlister said. “They never really have. It was one of the things that I struggled with as an employee at the company many years ago. And it makes it very difficult for people inside and outside to know how to help Yahoo win.”
Over the last decade, Yahoo has had six different CEOs pass through its doors. The latest, Marissa Mayer, is a computer scientist who was one of Google’s earliest employees. Yahoo appears to have the properties of a broken vase, and after almost four years, even Mayer can’t piece it together.
At its peak in early 2000, Yahoo was valued around $255 billion and stock was close to the $500 threshold per share.
Yahoo never really recovered from the dot-com bust. After a series of missteps, bad bets, and what Forbes calls a case in poor leadership, Yahoo is now valued at $34 billion, which is roughly a 87 percent decrease in value since 2000.
That $34 billion is roughly the value of its stake in its Asian holdings, particularly in Alibaba, the giant e-commerce company. According to CNN Money, the stock market is valuing Yahoo’s core business as something almost completely worthless.
There has been a lot of judgment inflicted on Mayer’s leadership role. Some people think her salary is too generous and is unjustified.
If Mayer gets fired before Yahoo is sold, her payout would undoubtedly be less than it would if she stayed on as CEO until her contract permitted.
If Mayer got fired, she would take home $12.5 million: $1 million in salary, a $2 million cash bonus, and $9.5 million in stock that would vest in 2016.
However, if Mayer stays and Yahoo gets sold under her jurisdiction she would get to take home three years salary of $3 million, roughly $9.5 million in stock, and about $24.5 million worth of awards for total of $37 million.
There is a silver lining for Mayer, Yahoo, and the stakeholders. This past Monday was the deadline for interested parties to submit bids for Yahoo. And according to several reports, it appears that Verizon is expected to make the final offer.
Google’s owner Alphabet, as well as Comcast, Barry Diller’s IAC, and Time Warner have all reportedly dropped out of the bidding war for Yahoo.
However, if Verizon plays its cards right, the payoff for Yahoo executives and shareholders might be substantial enough to keep Yahoo alive.