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Sarah Novotny is the Sr. Editor in Charge of Adotas. Sarah grew up in San Jose, California. Her educational and professional career have taken her to both Los Angeles and New York City where she received a B.F.A. from NYU. As a writer, Sarah has free-lanced for various publications focusing primarily on traditional advertising and media reviews. When not writing and editing for Adotas, Sarah is continuing her acting career in various theatrical and film/television productions.

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The Dark Days Of Yahoo

Written on
January 30th 2008
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Yesterday, Yahoo Inc. announced that its fourth quarter profit declined just over 23%, while many of the firm’s competitors experienced growth in the same time period. Company shares declined about 8.7%, or $1.81 to $19, a number that continues to fluctuate, dipping to a 10% drop. These numbers have not set the company up for success in the new year, however many industry insiders see the current valuation to be very low and not reflective of the true value. Most profess that this is a buying opportunity. 

In the fourth quarter of last year, Yahoo earned $205.7 million (15 cents a share), as compared to $268.7 million (19 cents a share) in the same quarter of the previous year. This is higher than the anticipated revenue projection by analysts at Thomson Financial, whom estimated 11 cents a share according to the AP.

Taking action, the company announced that it plans to cut 1,000 jobs which are 7.1% of its employees. Yahoo declares that the layoffs are a reflection of reorganization and clean up to focus on the future more than a statement of failure.

This is another step down in the Dark Days of Yahoo. Although Jerry Yang, co-founder and current CEO of the company has warned the media of “headwinds” that will not be alleviated completely this year, he also spoke of the downsizing as a positive move, stating “This is a necessary step in our transformation.”

Many industry insiders have been questioning the effectiveness of Yang and if he’s really the guy to get the job done at Yahoo. This is the eighth straight quarter Yahoo has experienced slowing profits and the three years of declining sales rates.

Since Yang came back on board at Yahoo, they have acquired Right Media, Blue Lithium and invested heavily into the world of mobile, and yet, executives have dropped like flies. Mr. Yang does not by nature come across as an extremely confident leader, but does have the years of experience that even the Google team would envy. At the Right Media Open conference in back in October Yang stated that “I do not see Yahoo as a troubled company, if you step outside of Silicon Valley and evaluate the impact of Yahoo it’s very successful and performing well.”

Perhaps he would restate his case after such a hit in Q4, but still Yang maintains that the company will bounce back to be the force it once was. Whether it’s the recession or the leadership, Yahoo is struggling, but the company has been putting up a fight.  Yang assured the press that these latest developments are not to be taken as the warning signs that so many are assuming they are stating the firm is “making profound, fundamental changes to virtually all aspects of our business…We’re not tinkering around.” He said that the firm will be unveiling many initiatives that will pay off in 2009.

When Steve Jobs, the former founder of Apple returned to the company, the market had left it for dead. Jerry Yang has not proven to be as charasmatic as Steve Jobs, but many on the inside see his direction as crucial and insightful as Steve Jobs was to Apple. It is still unknown whether it is enough to fend off Google. Yang has outlined a plan to getting beyond the past problems of doing business with the worlds largest portal and streamlining the things that Yahoo is good at. There are increasing reports of Microsoft making a play for Yahoo.



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Reader Comments.

To win back advertisers they need to win back consumers… so they need a strategy that is in line with the simplicity and power of the social graph created through Facebook and MySpace

Having said that, they appear to be further along than their competitors in the next frontier - mobile.

Posted by Phil Barrett | 4:50 pm on January 30, 2008.

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