Yahoo Downfall Analysis

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Running Head: Group Report on Yahoo!
Group Project on Yahoo!
Faculty: Hamida Mosharraf Moniea mam
Section: 13
Group 4
Ishtiaque Hossain Sajid
1731485630
Mustafizur Rahman
1721020630
Md Rafizul Islam
1721021630
Showrob Hossain
1721827630
North South University

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Table of Contents
Title Page no.
Abstract 3
Company Overview 4-9
Market Analysis 10-16
Downfall 17-22
What could have been done to avoid it? 22-26
Recommendations’ 26-29
Executive Summary 30
References 31

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Abstract
The name Yahoo! is quite well known to everyone. Most of us has come in contact
with its services one way or another. Before the mass growth of Google and Facebook, yahoo
mail and search were the most used site on the internet. Before even that the very early
Netizens had to rely on “Jerry and David’s guide to the world wide web” for surfing the
internet efficiently. It eventually became worth almost $125 billion.
But, with the rise of google, Facebook and many other competitors and also the
massive rapid expansion of the internet the share and growth of Yahoo started to decline. On
2008 yahoo’s share price traded as low as $8.94. Many acquisition deals were placed by
Facebook and merger by google but they all ended up unsuccessful. However, in 2017
Verizon Communications acquired most of Yahoo's Internet business for only $4.48 billion,
excluding its stakes in Alibaba Group and Yahoo! Japan which were transferred to Yahoo's
successor company Altaba.
So, what went wrong? What was their market condition in recent years? Could they
have avoided the massive downfall? What can they do now? All these are discussed in the
report.

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Company Overview
Founding
Yahoo! got its start in January 1994. In the early days on the internet — when no one knows
what content is out there — Jerry Yang and David Filo, two graduate students at Stanford
University, create a website called “Jerry and David’s guide to the world wide web”,
cataloguing sites. Both of them were candidates in Stanford's electrical engineering doctoral
program, spent much of their free time surfing the World Wide Web and cataloging their
favorite Web sites. In doing so, they created the Web site of their own that linked Internet
users to Yang's and Filo's favorite places in cyberspace.
In March 1994, "Jerry and David's Guide to the World Wide Web" was renamed "Yahoo!".
The human-edited Yahoo! Directory, provided for users to surf through the Internet, became
their first product and the company's original purpose. It was not long before the Yahoo!
database became too large to remain on the Stanford University computer system. Marc
Andreessen, co-founder of Netscape Communications, invited Yang and Filo to move
Yahoo! to the larger computer system housed at Netscape. Stanford benefited greatly from
this move due to the fact that its computer system finally returned to normal after having been
inundated by Yahoo!'s activity.
Expansion in 1995
In 1995, the personal guide was renamed and the company Yahoo! was officially born. The
name is said to be an acronym for “Yet Another Hierarchical Officious Oracle”. The
directory evolved towards the “portal” model, like most of its competitors at the time.
The portal is both a way into the Internet for Web-users and a way of capturing their
attention. Yang and Filo began selling advertisement space on their site in order to fund
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further growth. To manage both the creative and the administrative aspects of the Yahoo!
enterprise they recruited Tim Koogle. One of Koogle's first moves as the company's CEO
was to bring in Jeff Mallett as COO. Mallett was a former member of the Canadian men's
national soccer team who, at age 22, began running the sales, marketing, and business
development aspects of his parents' telecommunications company Together, Koogle and
Mallett began transforming Yahoo! from a homegrown list of interesting Web sites into the
most popular stop along the information highway.
The majority of Yahoo!'s revenue came through banner advertising deals. In basic terms,
Yahoo! sold space on its Web pages to companies wishing to promote their products to the
demographic that frequented the Yahoo! site. In this sense, banner ads were somewhat
superior to other forms of advertisement in that no other purveyor of advertising (television,
radio, magazines) had ever led consumers to a company quite so immediately. As another
means of generating revenue, Yahoo! struck up distribution deals with Web sites that were
looking to increase their own traffic. For example, Yahoo!, while not itself an online retailer,
boasted a lot of user traffic at its site. In this sense, Yahoo!, along with competitors such as
Excite, Infoseek, and Lycos, came to be known as a "portal"—a gateway to the rest of the
Internet. Through banner advertising and distribution deals, Yahoo! was able to continue
offering its services to Web surfers for free, as opposed to online services such as America
Online (AOL), Prodigy, and Microsoft Network. The latter three charged monthly fees for the
use of their offerings. Although these online service companies' offerings were often more
graphically intricate and visually pleasing than the Yahoo! site. It was not long before
Yahoo!'s user base was comparable to that of industry giant AOL, even though its 1995
revenues topped off at only around $1 million.
The Birth of a Brand
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In 1996 Yahoo was built around a simple directory, news headlines, Add Your URL, Cool
Sites, and Directory Search. Yahoo was also breaking into its Local direction with Yahoo Los
Angeles launching. Notice that Yahoo’s core offerings; Local Business & Maps, News,
Stocks, Search (in a directory capacity) and Sports have been around since the beginning.
Yahoo! went public, offering shares of its stock for $13. In the first day of trading alone, the
company's stock price sailed to $43, and its estimated valuation was quoted at upwards of
$300 million, more than 15 times its eventual 1996 revenues of approximately $20 million.
Around that time, Yahoo! decided to start promoting itself in through advertising. Another
former Stanford graduate, Karen Edwards, was brought aboard as the Yahoo! "brand
marketer," and she immediately lined up ad agency Black Rocket of San Francisco to handle
Yahoo!'s account.
Yahoo Slogan
A slogan is a short, memorable catch phrase, tagline or motto used to identify a product or
company in advertisements. The advertising slogan, or business slogan most associated with
Yahoo, is "Do you Yahoo?” Yahoo! used almost its entire advertising budget for 1996 to run
its first national-scale ad campaign on television. Luckily, the ad was an immediate hit. In the
television spot, a fisherman used Yahoo! to obtain some baiting tips, and then proceeded to
land a number of gigantic fishes. From this campaign arose the company tagline "Do you
Yahoo!?" Yahoo! executives hoped that the efforts would help their operation to blossom into
a full-fledged media company.
Yahoo Mission and Vision Statement:
Mission Statements and Vision Statements are written for customers and employees of
corporations. A Mission Statement can be defined as a sentence or short paragraph written by
a company or business which reflects its core purpose, identity, values and principle business
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aims. The definition for a Vision Statement is a sentence or short paragraph providing a
broad, aspiration image of the future.
Yahoo Mission Statement: "Our mission is to be the most essential global Internet service for
consumers and businesses. How we pursue that mission is influenced by a set of core values -
the standards that guide interactions with fellow Yahoos, the principles that direct how we
service our customers, the ideals that drive what we do and how we do it. Many of our values
were put into practice by two guys in a trailer some time ago; others reflect ambitions as our
company grows. All of them are what we strive to achieve every day."
Company objectivity:
As the first online navigational guide to the Web, www.yahoo.com is the leading guide in
terms of traffic, advertising, household and business user reach. Yahoo! is the No. 1 Internet
brand globally and reaches the largest audience worldwide. The quest to turn the Yahoo!
name into a major brand took a few wacky turns along the way. For example, Edwards
decided that the Yahoo! name simply needed to be out in the public eye as much as possible,
regardless of the manner in which it appeared. Yahoo! posters began appearing at many
outdoor locations, such as sporting events, concerts, and even construction sites. The Yahoo!
logo was placed everywhere, with one of the most notable places
Acquisitions and Further Expansion:
Yahoo streamlines their directory, adds a more advanced search offering, stays cool, and gets
Yahoo Shopping started with Classifieds. Following the trend set by online service
companies such as AOL, Yahoo! added services and features such as chat areas, Yellow
Pages, online shopping, and news. As it became a certifiable household brand name, the
company began striving to further satisfy the needs of its users. The company also added a
feature called "My Yahoo!," which was a personalized front page for regular users that
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displayed information tailored to each user's interests. The company also teamed up with
Visa to create an Internet shopping mall.
By 1997, Internet surfers were using Yahoo! to view approximately 65 million pages of
electronic data each day. That year, Yahoo! acquired online White Pages provider Four11 for
$95 million. Yahoo!'s offerings allowed the company to provide its users with free e-mail
(Yahoo! Mail). By mid-1998, over 40 million people were logging on to Yahoo! each month,
12 million of whom had become registered Yahoo! e-mail users.
In July 1998, Yahoo! received a $250 million investment from Japan's Softbank Corporation,
increasing Softbank's share of the company to approximately 31 percent. Yahoo!'s market
valuation at that time was $6.9 billion, which was much higher than that of most other media
companies. Also, in 1998, Yahoo! replaced Digital Equipment's Alta Vista with California-
based search engine specialist Inktomi as the supplier of Yahoo!'s search engine. By the end
of the year, Yahoo!'s user traffic had increased considerably since 1997, with Web surfers
viewing approximately 95 million pages of information through Yahoo! each day, a huge
increase from the previous year's average.
Dotcom disaster and the growth of Google
Yahoo began using Google for search in 2000. Over the next four years, it developed its own
search technologies, which it began using in 2004. In spring 2001 As Yahoo was hit by the
dotcom bust, chief executive Tim Koogle, who had led the company since 1995, is replaced
by Warner Brothers executive Terry Semel. In that year the shares in Yahoo sink to an all-
time low of $4.40. Summer 2002: Mr. Semel tries to buy Google for about $3bn but is
rebuffed. Google’s co-founders reportedly want $5bn. Having bought up smaller search
engines, Yahoo begins using their web crawling technology to power the web search function
on Yahoo.com. In June 2007 Mr. Semel resigns, replaced by co-founder Mr. Yang. In
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response to Google's Gmail, Yahoo began to offer unlimited email storage in 2007. The
company struggled through 2008, with several large layoffs.
Connecting with Verizon
Verizon is a telecoms company. It sells mobile connectivity and fixed line connections - but
these are effectively dumb pipes. So, combine this with what Yahoo has to offer and
suddenly Verizon has a tasty piece of web real estate, with all of the eyeballs that implies.
And the combined company should prove attractive for advertisers too. On July 25,
2016, Verizon Communications announced that it had agreed to purchase Yahoo's core
Internet business for $4.83 billion. Following the conclusion of the purchase, these assets
merged with AOL to form a new entity known as Oath Inc. since the acquisition was
announced there has also been speculation that the underlying technologies driving the
advertising in both companies could also be combined to create more sophisticated tools.
This could mean adverts are better targeted thanks to a richer pool of data - and will result in
a higher click-through rate. Which are exactly the things that advertisers want.
It seems likely that the Yahoo name will continue to live on. The brand is surely too valuable
just to throw away. But it is the end of an era as the company that provided a portal to the
digital age for a generation of internet users is no more. One day historians might look back
and search for an explanation of how it all went wrong - but they'll probably use Google to do
it, instead of Yahoo.
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Market Analysis
We are going to do our analysis on yahoo with the help of corporate strategical tools.
SWOT Analysis
Strength Weaknesses
•Yahoo has the maximum number of users •As per Jan 2012 data, a survey says
and most of revenue is generated through Yahoo’s market share in search engine is
ads in yahoo mail only 6%
•Due to its large mail subscriber base, •Google already has 83% market share and
yahoo is considered to be the powerful the immediate competitors are Baidu which
marketing company has same 6% and Bing has 4% in search
engine
•Yahoo is known for its web portal, search
engine, yahoo finance, yahoo answers, •Yahoo is losing its market share in
yahoo mail, yahoo directory etc. mailing services very gradually due to
Google’s strong presence in search engine

•Its product portfolio includes yahoo
market and it related product portfolio
messenger, yahoo mail, yahoo personals,
complementing to search engine services
yahoo 360, Delicious, Flickr, Yahoo Buzz,
yahoo Mobile, yahoo shopping, yahoo real •Mail services, news, shopping, financial
estate, yahoo next, yahoo boss, yahoo data and business directory services are
meme, Y! connect Etc. provided by many others like MSN, CNN,
e-bay, Money control etc.

• strong brand name the global market
• Powerful partnership in business •Financial health of the company is not so
with MLB, VISA, and NFL(Yahoo, promising for the investors. The company’s

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2013) assets both in terms of intangible and
• International presence in business tangible are on the declining side.
• The large capability to accumulate

•Google being the leading the service
the data required
provider on the internet, is grabbing the
• The efficient E – commerce
revenues from advertisements
enterprise
•Most of the services provided by Yahoo
• Easily accessible
are unknown in the internet space
• Wide range of products and services
as per the need and demand of the • The image search of the company is
customers in the market. declining each and every year by 3
percent. (Yahoo, 2013).
• The company is not focusing on the
advertisement concept so that the
revenue is reducing.
• Less focus on the vertical
integration so that they will be able
to control the suppliers for the
coordination of the operation.
• The company has the low market
share for the mobile application.
Opportunities Threats
 Yahoo Directory is the most structured The biggest threat for any global service
and authenticated business directory, any provider on the internet is increasing

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customized development to its user in this competitions in the local market
will lead to flow of new revenue to the especially China.
company
 Another major threat is addressing of the
 The number of mobile users is constantly cultural issues while going to foreign
increasing in developing nations. market
Development of Yahoo! Mobile app

 Yahoo’s presence in the search engine
services will improve the market share
services is declining very rapidly because
 Advertising in social media and internet of Google’s strong presence
has become essential element for every

 The number of competitors is increasing
commodity
of new innovations in the internet space by
 Yahoo has huge potential in combining young entrepreneurs
its services with social media platforms like

 The advertising market which was once
Flickr etc.
dominated by yahoo is being slowly
 It can focus on diversification of related grabbed by the social networking sites like
business segments in Internet space Facebook, Myspace etc.
• Opportunity for the establishment of
the mobile application.

 The threat from the competitors
• Opportunity for the advertisement
 The threat from the political barrier
platform.
so that the company has been
• Diversification in its services to
restricted to enter China.
penetrate the new market by
 Large range of the substitutes is
satisfying the customers.
another set of threat factor to the
• The broadband extension is another
company.

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important opportunity that the  The key competitor is Google (Yahoo,
company has. 2013).
• The strategic alliances are another  The reduction in the number of the
important opportunity that the employees is not supporting the
company has. continuous innovation as per the
demand of the market.
Porter’s Five forces
Force Rating Description
Many new companies are coming up in the
market as people are becoming the internet
Threat of entry Medium associated. But, it is not easy to imitate the
innovative idea that Yahoo has to compete
with them. (Yahoo, 2013).
With the technological development, the
people are using the mobile and Tablets to
Threat of search any information rather than the

High
substitutes desktop. So, it is required by the company to
use the innovative idea to shift the focus to
them. (Yahoo, 2013).
Bargaining With the enhanced substitutes products and

power High websites in the market offering the same
of buyers information, the customers are most willing

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to go for the less costly products to search
for the information rather than purchasing
the Yahoo products. If they will buy, it is as
per their wish and loyalty but, with the
introduction of the new websites, the
bargaining power is increasing.
With the excellent merger and acquisition

Bargaining
with more than 67 mergers in the last five
power Medium
years, they can manage the great amount of
of suppliers
the suppliers. (Yahoo, 2014).
How Yahoo Makes Money
•Yahoo! offers services to other Web site companies.
>pay Yahoo!< to post adds<
• When you click on an add, somehow the company measures this, the company pays Yahoo!
money.
• More money made on the product is relatively related to the popularity of the host of the
Ads.
Revenue Model
• About 88% of revenues came from marketing services. The largest segment of it was from
search advertising, where advertisers bid for search terms to display their ads on the search
results; on average Yahoo makes 2.5 cents to 3 cents from each search.
• Other ways of income are-

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• yahoo auction which is currently offering services to only three countries- Hongkong,
Japan, Taiwan. Yahoo set up this service to compete with eBay.
• Yahoo shopping
Financial Condition
Here are the revenues and the revenue growth details of Yahoo during the last five years:
 Yahoo generated a total of $5 billion revenues during 2012. Yahoo reported a revenue
growth of 0% year-over-year during 2012.
 Yahoo generated a total of $4.7 billion revenues during 2013. Yahoo reported a revenue
growth of -6.1% year-over-year during 2013.
growth of -1.3% year-over-year during 2014.
 Yahoo generated a total of $5 billion revenues during 2015. Yahoo reported a revenue
growth of 7.6% year-over-year during 2015.
growth of 4% year-over-year during 2016.
Ranking according to revenue:
 With $5.2 billion revenues, Yahoo ranked number 500 in the R&P Research list of
top-3000 public companies in the US by revenues during 2016.
 With $5.2 billion revenues, Yahoo ranked number 48 of all the companies in the US
Technology sector.
 With $5.2 billion revenues, Yahoo ranked number 9 of all the companies in the US
Internet industry.

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 With $5.2 billion revenues, Yahoo was in the Large Companies revenue segment
during 2016. (Having revenues between $1B-$10B)
 With 4% revenue growth year-over-year, Yahoo was in the Low positive revenue
growth segment during 2016. (having annual revenue growth between 0% and 5%.)
 With a net margin of -4.1%, Yahoo was in the Low negative net profit margin
segment during 2016. (having net profit margin between -5% and 0%.)
BCG Matrix
Stars Question Mark
Mobile Ads Search Ads
274 million revenue, 58% increment 310 million revenue, 10% decrement
Cash Cow Dogs
Desktop Ads Display Ads
693 million revenue, 10% decrement 398 million revenue, 30% decrement

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Downfall
So where did it all go wrong for the firm and what lies ahead? Which once was worth
almost $125 billion, but today sold to Verizon for $5 billion.
There is no one single reason that Yahoo "went wrong", that they aren't seen as one of
the tops of internet companies like they once were. This is partly because Google and
Facebook have come to dominate the online advertising market from where Yahoo derives its
revenue.
According by many investigator opinions they said YAHOO have done major
mistakes which are cause of their fall down. Such as YAHOO wasn't originally a search
engine, and it certainly wasn't a technology company. The world where other substitute
company build their mobile or social program and they used home pages to a mobile and
social world. Yahoo failed to build their own successful mobile and social products or to
acquire any. Yahoo got too inflated, and nobody would ever make the cuts needed to both
headcount and its products/properties. YAHOO liked to think it was a media company, not a
technology company.
Lack of founder involvement in products
I've heard (from the more veteran Yahoos) that Jerry and David are super-smart and are great
guys. I too have no doubt that they are. However, by the time I joined the company (in 2006),
they seemed to have essentially washed their hands of product decisions at Yahoo!. The
largest companies in the consumer internet space live and die by their product prowess. That's
why Larry & Sergey at Google, and Mark Zuckerberg at Facebook are deeply involved in
major product decisions to this day.
A corollary here is that there was no clear decision maker at Yahoo! when it came to
product. This created an environment of confusion and sluggishness - there was no urgency
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to fundamentally improve existing products or a fire in the belly to create new products &
product categories.
Lack of "guts"
Somewhere in the early to middle part of the last decade, Yahoo! turned into a
company that was too afraid to do anything bold. They had no dearth of creativity. In fact,
some of the most brilliant designers and engineers I know worked there and these same
people have gone on to do great things after Yahoo!. Yahoo! was just too afraid to do
anything that had any chance of annoying a segment of users (however small that segment
might be), causing the company to get sued, negatively impacting the stock in the short term,
etc. This attitude caused Yahoo! to become a place that was basically ruled by the lawyers. In
fact, your success as a product manager depended mostly on whether you could convince the
Legal team to let you do what you wanted. Several features and products were built at
Yahoo! that either never saw the light of day or were eventually launched as hugely watered-
down versions of the original product vision.
By contrast, Google has always had the guts to take really bold steps, as long as it believed
that those steps were for the greater good.
Poor internal communication
There was little to no internal communication on company strategy & priorities [4] or
on alignment of efforts across products or an open discussion of the tough issues facing the
company. At all hands meetings, execs talked about how Yahoo!'s an amazing company
making a big impact on the world (i.e. the usual corporate BS) and never really talked
candidly about the fact that Yahoo! was churning increasingly inferior products compared to
its competitors. Companies that fail to communicate well internally also fail to do well.
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Also, Yahoo didn't rate technology and didn't hire good programmers, Yahoo treated
programming as a commodity. The job of programmers was just to take the work of the
product managers and designers the final step by translating it into code, claimed former
Yahoo employee Paul Graham. One obvious result of this practice was that when Yahoo built
things they often weren't very good. But that wasn't the worst problem. The worst problem
was that they hired bad programmers.
A corollary here is that Yahoo! became a company where the lawyers and product
managers (and in some groups, sales) called the shots. Engineering - in many parts of the
company - became merely a "service organization", whose job was to deliver on-time and at a
sufficiently high quality. Engineers would wait for product managers to provide a super-
detailed requirements spec [6], engineering managers would heavily pad project schedules
(the old "under-promise and over-deliver" - except that unfortunately they hardly ever over-
delivered), sales had a big say in what got built, and so on. This is very dangerous for any
consumer internet company. There's a reason why - at companies like Google and Facebook -
engineering is the most influential function within the company.
Another corollary is that Yahoo! also added multiple management layers during its
growth period, likely in an attempt to better manage the growing number of B-players. Titles
at Yahoo! also became inflated by at least 1 and often 2 levels. At one point in 2007, Yahoo!
had more than 300 VPs.
The company emphasized on collaboration, while many of the players were too big to
be acquired.
Its dependence on advertising revenues from dot com companies resulted in
substantial loss (US$84 million against the profit of US$169 million in the corresponding
period of previous year) in the first nine months of 2001.
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Hiring wrong CEOs. Leadership changes, looking at subtitles companies like Google
and Facebook that the same leadership has essentially been in place the whole time. But
Yahoo has had a shifting cast of CEOs and executive teams that has never provided a longer-
term vision and execution path to take shape. According to an Inquirer report, Yahoo has
repeatedly hired wrong CEOs. The report states that none of the CEOs at Yahoo including
Marissa Mayer had a "strategic vision" that could match what Eric Schmidt at Google
brought.
Not buying Google because it wanted to be a web 'portal'. Similarly Missing out on
Facebook, Yahoo had a chance to buy Facebook in 2006, for $1 Billion but because of
depression in stocks, Yahoo lowered its offer to $850 million. This resulted in Facebook CEO
Mark Zuckerberg rejecting the deal. Later Facebook went on to become the biggest Social
network and along with Google, caused the fall of Yahoo.
Rejecting Microsoft’s buyout Offer in February 2008, Yahoo declined a $44 Billion
offer from Microsoft citing it to be “too low”. Yahoo at that time, failed to recognize its
falling popularity and did not make any attempts to reinvent itself in order to survive in the
competition. The offer of Microsoft was almost 10 times of what it got from Verizon now.
Destroying the value of acquisitions with a one-dimensional approach, before there
was Instagram, Snapchat and (just) Facebook, there was Flickr. This terrific website provided
a repository for photos that could be private, or openly published. Users got some free space
on Flickr's servers and, if they wanted to go mad, could pay for more. And it was a genuinely
good deal when Yahoo took it off the hands of its founders for a mere $35m or so. However,
all the lavish promises of non-interference before the acquisition was made disappeared
shortly after the deal was completed. First, Flickr staff had to spend their time integrating the
company and its platforms with Yahoo, rather than working on the product. Others reasons
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like Yahoo Focusing on Panama (Google AdWords competitor) for so much year and search
in general, when they ended up losing to Google and eventually outsourcing this to
Microsoft.
A little of everything led to the failure of once a BIG company.
 Yahoo failed to promote executives within the company and got people from outside
the company. People inside the company obviously did not like this. When people are not
appreciated well for the work, they lose interest in working as well
 No work from home culture: Yes, free food was provided and this was done with a
clear motive of making people work, but this initiative was heavily criticized within and
outside the company.
 Mark Zuckerberg turned down Facebook acquisition by Yahoo!? All Yahoo! had
to do then was acquire Myspace which was dominating the social media then and rule the
social media. Yahoo! could have made a good bid on Orkut as well.
 Failure to focus: Yahoo! had so many products that the company lost its focus. It was
hard to decide what they had to focus on. They fell into the constant state of debate of:
o Whether to improve current products
o Or innovate
 Jack of all trades: Yes, Yahoo! was everywhere. Search, mail, messenger, finance,
news, sports, entertainment, etc. They were in top 10 always- Yes! But did it lead in any of
them? No!
 Acquiring was the end game: Yahoo! acquired many companies, but did not do
anything with it. Flickr easily had over billion posts and had so many active users. But
Yahoo! played no role in improving it

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 Let the best products die: Some of best and people’s favorite Yahoo! products died
o Yahoo! Messenger
o Yahoo Answers could have been a game changer
o Yahoo videos could not take over giants like YouTube and gave up on improvising
very quickly
 Not being in the present: This is the era of artificial intelligence and smart
computers. But Yahoo! failed to compete with leading industries like Google, Apple (Siri)
and Facebook.
To sum it all up
I believe the fundamental cause for Yahoo!'s downfall was that its growth wasn't
managed properly by its founders and executives. While the mistakes I described above
might appear elementary, they're all too easy to make as the growth of a company outstrips
the capabilities of the very people that got the company to that stage. It is a sad state to see
once a dominating leader be acquired at such a low price!
What Could Have Been Done to Avoid It?
Although Yahoo was certainly not alone in being taken by surprise, it could have
done a better job of anticipating the high-tech slowdown.
 Specifically, even in the absence of any evidence that pointed directly to a slowdown,
the firm should have looked carefully at its business model for areas of vulnerability.
 Early identification of potential weaknesses, threat and opportunity would allow more
time for planning and preparation of strategies to offset those weaknesses and threat and
successfully, timely mobilize and align resources in direction of opportunities

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 Yahoo’s model, charging advertisers in order to provide free services to consumers,
was very vulnerable to slowdown in advertising expenditures.
 Additionally, most of the firm’s advertisers were concentrated in the high-tech
industry, which increased Yahoo’s vulnerability.
 Scenario planning is one tool the firm could have used to identify vulnerabilities.
 More diversification was required to reduce dependence on one particular type of
industry, e.g., dot com
 Revenue streams needed to be broadened with the change in economic environment
 Sectors that are relatively less affected by economic slowdown could be targeted, e.g.,
entertainment
 Country specific services could be promoted
 External: Diversify by broadening of the product line, spread Risk, create Synergy
and Joint Venture.
 Building partnership and Joint Ventures.
 Internal: Restructuring, cost reducing, concentrate on products & division with high
potential.
 integrating they have 42 SBU reducing them, Liquidation and Innovation.
 Cost reduction and restructuring.
 Focus should have shifted from market pull (dot.com frenzy) to market push.
 Intrinsic to this collection of strategies should be turning cost centers into revenue
centers.
 “Yahoo confused being in the right place — at the right time — with being smart”
If Yahoo had launched a year or two later, they probably would have been irrelevant.
They rose to dominance in large part by benefitting from what Y-Combinator cofounder Paul
Graham — who worked there — called a “de facto Ponzi scheme”
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“Investors were excited about the Internet. One reason they were excited was Yahoo’s revenue
growth. So, they invested in new Internet startups. The startups then used the money to buy ads
on Yahoo to get traffic. Which caused yet more revenue growth for Yahoo, and further
convinced investors the Internet was worth investing in.”
The growing revenues from this runaway feedback loop tricked Yahoo’s management
into thinking that they were smart, when really, they were just lucky. As the dominant web
portal, money came easy for Yahoo. They never bothered to build a strong engineering
culture, like Facebook and Google did. After all, why should Yahoo invest in its underlying
technology when they could just hire more sales people to sell banner ads? Yahoo’s initial
success gave them the hubris they needed to start acquiring other companies, thinking that
they could run those companies better than the companies could run themselves.
Here are some companies that Yahoo bought:
 GeoCities ($3.6 billion)
 Tumblr ($1.1 billion)
 Mark Cuban’s Broadcast.com ($5.7 billion)
Broadcast.com and Tumblr are widely considered two of the worst acquisitions of all time,
and were largely written off as losses. In less than 10 years, GeoCities went from being the
third most visited website on earth to being shut down everywhere but Japan.
 “Yahoo forgot what it was that got them there.”
Distracted by all the acquisitions, Yahoo’s leadership forgot about its healthy core
products. Here are a few multi-billion-dollar industries it ceded to new entrants:
 Yahoo Mail lost to Gmail
Showrob Hossain
25
 Yahoo Answers lost to Quora
 Flickr lost to Instagram
And most humiliating of all, Yahoo Search lost to Google Search — to such an extent that in
2009, Yahoo scrapped their 13-year-old search engine in favor of licensing Bing Search,
which Microsoft had just launched.
These were all services where Yahoo had a multi-year incumbent lead, with millions
of active users. They had the funds. They had the traffic. They could have experimented and
improved upon these services. But they failed to take the initiative. Instead, they got out-
designed and out-engineered at every turn.
 “Yahoo slaughtered its golden goose while it was still producing eggs.”
In 2005, Yahoo cofounder Jerry Yang made one of the smartest investments in
history — he purchased 40% of Chinese e-commerce site Alibaba for $1 billion.
Today Alibaba is worth more than $200 billion, and it’s still growing. That means that
Yahoo’s stake in Alibaba must be worth $80 billion dollars!
Except, wait. In 2012, Yahoo decided to sell off significant portions of its Alibaba stock. They
sold even more in 2014.
Yahoo thought they were pretty clever at the time, because they profited a few billion dollars
off of these sales.
Today, Yahoo only owns 15% of Alibaba, but that asset alone is worth $30 billion — six times
as much as all of Yahoo’s core businesses.
But, oh, that bittersweet $50 billion that they let get away.
Showrob Hossain
26
 “Yahoo let their assumptions blind them to new opportunities.”
Larry Page and Sergey Brin tried to sell Google to Yahoo in 1998. They only wanted
$1 million. Yahoo rejected them because they wanted their users to spend more time on
Yahoo directories, where they would be exposed to banner ads. Better search — like the kind
Google was offering — would quickly route users away from Yahoo. It didn’t occur to Yahoo
that doing what was best for users might ultimately be best for the company. Or that Google
might use this technology to, you know, compete with Yahoo. Of course, we all know how
this story ends — with Google being worth $500 billion, and Yahoo being carved up and sold
to a utility company for one one-hundredth of that.
So, if yahoo could avoid those mistakes they would be the leading Internet portal that
incorporates a search engine and a directory of World Wide Web sites.
Recommendation
There are some steps which can be taken to get back in successful position and works
as helpful for the company. They are:
1. The Head of company has to be involved directly with the product design when the idea is
turning into manufactured.
2. Decrease the amount of ad on websites and increase the cost of Internet video advertising.
3. Bring some interesting and attractive variations to make Flickr more popular to users.
4. The company has to ensure to build up the internal communication among all the
employees for getting super idea.
5. Leadership is one of the most important things to take the company on the way of success.
The company’s CEO has to be enough percipient and decision maker to convert any idea in
successful mission and make the vision clear.
Md. Rafizul Islam

27
6. Focus on the problems for how to solve it properly and quickly.
7. They have to find the reasons for being popular and exceptional and give the users
something different by comparing with the same type of companies such as Google, Microsoft
Corporation etc.
8. At the time of hiring employees, they have to think to take the expert and qualified who will
do the best for the company.
9.Make the service simple to users. Never underestimate or overestimate your users. Believe it
or not, most people are digital illiterates or slightly better. Part of the “U” in UX and UI is the
user. Always put yourself in their place when designing a website.
10. Yahoo will have to ensure to give relevant information and the fastest search results to
users.
11. The company has to take risk for a better development of the company.
12. They have to give motivation and extra benefits to the employees so that they don’t move
to another company by getting opportunities.
13. The CEO of the company will have to focus and make their every mission effective for a
better future of the company.
14. They have to be concerned about the failure so that it’s not happened in next time.
15. One of the problems which is happened in past failed to create home page. The look of
home page has to be simple and beautiful to attract users and don’t load up your home page
with too much because people will click off slow loading sites. As Jakob Nielsen suggests,
response times beyond 1 second start dissolving the illusion that the user controls the
experience.
Md. Rafizul Islam

28
16. Encourage the target market to use Yahoos search engine extensively by doing various
campaigns to raise awareness.
17. They have to acquire some potential trendy software which has good future and can
increase the revenue of company.
18. Changing the CEO frequently is a bad thing for the company. It takes a lot of time to
understand the problem and inner condition of a company to CEO. The same leadership has
essentially been in place for a long time to provide a long-term vision and execute the path to
take in a shape.
They need a professional CEO like Google, Microsoft Corporation etc.
19. To update their software properly so that their product cannot be lost by other Companies
product.
20. Improving the presence of yahoo in the mobile and social networking sectors with more
features can make the company bigger. Now most of the search engine company is going to
catch the smartphones market.
21. Before investing somewhere, they have to think about the future of these properties.
They should take these lessons to heart and never do the same mistakes:
a) Don’t confuse being in right place at the right time with being smart.
b) Don’t forget what it was that got you to where you are today.
c) Don’t slaughter your golden geese while they are still producing eggs.
d) Don’t fall for people who are professional professionals.
e) And most of all don’t let your assumptions blind you to new opportunities.
Lessons learned (for the long term)
Md. Rafizul Islam

29
 focusing on one thing and becoming the best at it is important
 effective automation beats manual labor
 quality hiring and retention are important
 lean operation helps survive in a slow economy
 planning and optimizing for the large scale - data, processing, engineering, business,
branding - ensures continuing innovation and helps capture new markets.
 Google’s obsession with infrastructure and its data-driven culture of self-improvement
were prescient (Amazon is another example). Reliable and scalable infrastructure is very
attractive to engineers - it improves the learning curve, avoids routine, provides a valuable
experience and helps building resumes even when projects fail. It also makes possible
acquisition more attractive to innovative companies that can leverage their technology at the
Google scale. Google realized this advantage early and made a number of strategic
acquisitions, such as YouTube, the team that developed the Android OS, and more recently
DeepMind. In contrast, Yahoo wasn’t as successful in acquisitions and their integration, so
missed many market opportunities
Md. Rafizul Islam

30
Executive Summary
Starting as one of the first tech media company, Yahoo! had and still has a great first
mover advantage. They dominated the internet, was also at a type was what internet meant but
lost their place to Google and Facebook. While they had a lot of opportunity for holding their
position they lost them due to faulty and reluctant management among other things. They were
required to be Pro-active but they hesitated to be even reactive.
Through Market analysis it is prominent that still now all of their revenue segments are
in decline except mobile Ads, stocks in Ali Baba and Yahoo! Japan. They need to act fast and
accurately to bring the most out of these sectors while planning their long-term sustainability.
As much as I'm a fan of Yahoo! (the company), I believe Yahoo! cannot be turned
around and its best days are well behind it. While Marissa Mayer has done an amazing job to
improve Yahoo!'s image, the fact is that you can't make a great consumer internet company
without having amazing people (especially engineers). Yahoo! is getting some quality
business folks and product managers via Acqui-hires and from companies like Google, but
what they actually, need is thousands of high caliber engineers that can build better products
than its rather formidable competitors. Plus, there's the perception issue of Yahoo! products
being just not as interesting and as polished as its competitors'. Sometimes, you can
successfully change reality without successfully changing perception.

31
References
https://www.marketing91.com/swot-analysis-of-yahoo/
https://revenuesandprofits.com/yahoo-revenues-and-revenue-growth-from-2012-to-2016/
https://www.businesswire.com/news/home/20170418006457/en/Yahoo-Reports-Quarter-
2017-Results
https://www.quora.com/What-went-wrong-with-Yahoo-It-was-once-worth-almost-125-
billion-but-today-sold-to-Verizon-for-5-billion
http://www.essaywritinghelps.com/wp-content/uploads/2017/02/Sample4.pdf
https://www.referenceforbusiness.com/history/Vi-Z/Yahoo-Inc.html
https://en.wikipedia.org/wiki/History_of_Yahoo!#Post_dot-
com_bubble_(2002%E2%80%932005)
https://en.wikipedia.org/wiki/Yahoo!
http://www.statista.com/statistics/260291/number-of-full-time-yahooemployees/
http://fortune.com/2016/02/03/yahoo-turnaround-2/
http://www.latimes.com/business/hiltzik/la-fi-mh-is-yahoo-dead-20151214-column.html

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1

Running Head: Group Report on Yahoo!

Group Project on Yahoo!

Faculty: Hamida Mosharraf Moniea mam

Ishtiaque Hossain Sajid

North South University

Title Page no.

Company Overview 4-9

Market Analysis 10-16

What could have been done to avoid it? 22-26

Ishtiaque Hossain Sajid

internet efficiently. It eventually became worth almost $125 billion.

successor company Altaba.

Ishtiaque Hossain Sajid

users to Yang's and Filo's favorite places in cyberspace.

Andreessen, co-founder of Netscape Communications, invited Yang and Filo to move

inundated by Yahoo!'s activity.

development aspects of his parents' telecommunications company Together, Koogle and

most popular stop along the information highway.

superior to other forms of advertisement in that no other purveyor of advertising (television,

revenues topped off at only around $1 million.

The Birth of a Brand

a full-fledged media company.

Yahoo Mission and Vision Statement:

corporations. A Mission Statement can be defined as a sentence or short paragraph written by

broad, aspiration image of the future.

Acquisitions and Further Expansion:

Visa to create an Internet shopping mall.

12 million of whom had become registered Yahoo! e-mail users.

increasing Softbank's share of the company to approximately 31 percent. Yahoo!'s market

increase from the previous year's average.

Dotcom disaster and the growth of Google

company struggled through 2008, with several large layoffs.

Connecting with Verizon

it, instead of Yahoo.

ads in yahoo mail only 6%

marketing company has same 6% and Bing has 4% in search

Google’s strong presence in search engine

meme, Y! connect Etc. provided by many others like MSN, CNN,

e-bay, Money control etc.

• Powerful partnership in business •Financial health of the company is not so

Ishtiaque Hossain Sajid

• International presence in business tangible are on the declining side.

• The large capability to accumulate

customers in the market. declining each and every year by 3

percent. (Yahoo, 2013).

• The company is not focusing on the

advertisement concept so that the

• Less focus on the vertical

integration so that they will be able

to control the suppliers for the

coordination of the operation.

• The company has the low market

share for the mobile application.

and authenticated business directory, any provider on the internet is increasing

Ishtiaque Hossain Sajid

will lead to flow of new revenue to the especially China.

increasing in developing nations. market

Development of Yahoo! Mobile app

 Advertising in social media and internet of Google’s strong presence

has become essential element for every

 Yahoo has huge potential in combining young entrepreneurs

its services with social media platforms like

business segments in Internet space Facebook, Myspace etc.