yahoo stock
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Yahoo-Tumblr Deal a Hail Mary Pass That May Never Pay Off
The Yahoo-Tumblr deal is a $1.1 billion gamble aimed at rejuvenating a stagnating business, but is more likely to end up a costly mistake.
The deal, announced today (Monday), is by far Yahoo CEO Marissa Mayer's biggest - and riskiest - acquisition yet.
Yahoo! Inc. (Nasdaq: YHOO) wanted access to Tumblr's 117 million users, most of them teens and young adults, to give it a beachhead into the ever-more important world of social media.
Tumblr has grown rapidly by making it easy not only to create blogs, but for Tumblr users to follow and share one another's posts.But Tumblr, like so many other social media companies, is not exactly a money machine. Analysts estimate the company's 2012 revenue was just $13 million, making it a pricey acquisition indeed.
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If I Owned Yahoo (Nasdaq: YHOO) Stock, I'd Be Pissed
It's no wonder Yahoo! Inc. (Nasdaq: YHOO) investors are pissed. I would be too if I owned Yahoo - but I don't.
Why not?
Maybe it's the four CEOs in five years, the botched sale to Microsoft in 2008, or a Chief Executive Officer who can't be bothered to verify his own credentials in SEC filings.
Or maybe it's the dysfunctional board of directors and the erosion of massive amounts of shareholder value over the years.
Add it all up and you have an unmitigated disaster on your hands.
Activist shareholder Daniel Loeb, who owns 5.8% of the company through his hedge fund, Third Point, LLC, has every right to be angry and vocal about it.
The way I see things, Yahoo is following what I call the Christopher Columbus School of Management: it has no idea where it's going, has no idea where it's been and has no idea what to do when it arrives.
The Search for an Identity at Yahoo (Nasdaq:YHOO)
Yahoo was ostensibly a search engine in the beginning. The latest outgoing CEO, Scott Thompson, had been trying to rebuild the beleaguered Silicon Valley company into one more reflection of his own strengths in data personalization as opposed to the bloated advertising-driven business it has become.
Whether or not Thompson would have succeeded is now a moot point. Incoming interim CEO Ross Levinsohn has an advertising background. Talk about a conundrum.
Here's the thing...
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Yahoo (Nasdaq: YHOO) Needs More Than Just a New CEO
The black cloud following Yahoo! Inc. (Nasdaq: YHOO) seems bigger than ever.
Just one day after he was forced to leave the forlorn Internet company for padding his resume, reports surfaced that ex-Yahoo CEO Scott Thompson revealed he has cancer.
According to a report in The Wall Street Journal, citing unnamed sources, Thompson told Yahoo's board and several colleagues of his thyroid cancer before resigning Sunday.
A source told The Journal that Thompson's decision to leave his position at Yahoo was in part influenced by his cancer diagnosis.
News broke last week that Thompson embellished his resume with a degree in computer science, when he actually earned a degree in accounting from a small Massachusetts college.
Thompson was hired in January to replace Carol Bartz, who was fired by phone last September.
In the revolving position at Yahoo, former head of global media Ross Levinsohn has been named interim CEO.
New CEO Boosts YHOO
Levinsohn had a triumphant stretch running Internet services within Rupert Murdoch's media empire at News Corp. before Bartz lured him to Yahoo in 2010. Levinsohn previously ran ad sales for Yahoo's Americas unit.
Yahoo investors applauded the media veteran's appointment. Yahoo shares tacked on 2.2% in premarket trading Monday ahead of a nasty open for U.S. markets.
Levinsohn has significant credentials as a negotiator. Before coming aboard at Yahoo, he had a history of recognizing and acquiring an assortment of digital media companies around the globe. That is a striking comparison to Yahoo's last two CEOs, who had stronger backgrounds in technology than media.
"We view Mr. Levinsohn as well-equipped to lead the organization and to build off the company's core strengths - advertising products and digital media," said Spencer Wang, an analyst with Credit Suisse.
But Yahoo still faces a rocky road ahead.
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More Reasons to Avoid Yahoo (Nasdaq: YHOO) Stock
There's been no shortage of reasons for investors to avoid Yahoo! Inc. (Nasdaq: YHOO) stock this year.
Yahoo, once revered as a web pioneer, has been stunted and dwarfed by those who followed in its footsteps.
The storied Internet content company has been upset by an increasing number of competitors like search engine behemoth Google Inc. (Nasdaq: GOOG) and social networking giant Facebook Inc. (Nasdaq: FB), and been wounded by waning ad sales.
Yahoo also is very late to the game in the battle for the mobile space, currently the biggest area of growth for the industry.
And then there is the question of diminishing revenue, declining earnings and slumping stock price.
Revenue fell by more than a fifth last year. Yahoo's stock price has slipped 17% over the past year, and 50% over the past five.
"Yahoo just can't get its act together," Money Morning tech guru Michael A. Robinson warned in January, naming Yahoo a "tech stock to avoid" in 2012. "While key executives were napping, Google burst on the scene a decade ago and rewrote the rules of web search and advertising. Portals like Yahoo never regained their traction."
As Yahoo's struggles continued, CEO Carol Bartz was recently let go with a phone call in September. In January, former PayPal president Scott Thompson was brought in as Bartz's successor.
And now the latest replacement may soon be replaced himself.
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Is Google (Nasdaq: GOOG) Plotting a Yahoo (Nasdaq: YHOO) Takeover?
Yahoo! Inc.'s (Nasdaq: YHOO) never-ending troubles may renew Google Inc.'s (Nasdaq: GOOG) appetite for the once-mighty Internet giant.
After all, it wouldn't be the first time Google considered the deal.
In October, Google talked to at least two private-equity firms about helping them finance a deal to buy Yahoo Inc.'s core business, a person familiar with the matter told The Wall Street Journal.
But the latest bout of attrition at the senior management level and a flurry of strategic blunders may rekindle Google's desire to acquirethe struggling firm.
Why Buy Yahoo?
Even so, many investors are questioning why anyone would want to buy Yahoo.
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Yahoo's New CEO: The One Thing Scott Thompson Needs to Do
Four months after chief executive Carol Bartz was let go, Yahoo Inc. (Nasdaq: YHOO) appointed new CEO Scott Thompson to salvage the sinking Internet company and do something Bartz couldn't - win shareholder support.
Thompson, most recently president of eBay Inc.'s (Nasdaq: EBAY) PayPal unit, is taking over the lead role. Yahoo is in dire need of new strategies to increase site traffic and attract advertisers if it hopes to defend against increasing competition from tech giants Google Inc. (Nasdaq: GOOG) and Facebook Inc.
Shareholders were frustrated with the decision, however, since they were pushing for the struggling Yahoo to sell.
"It's probably a slight negative because I think the best outcome for Yahoo would be an all out takeover by Microsoft," Brett Harriss, an analyst at Gabelli & Co., told Bloomberg News. "Hiring a new CEO makes the sale of the whole company unlikely."
Thompson is the company's fourth CEO in five years. Now the pressure's on him to win over shareholders and inspire investor confidence before the share price plunges.
