The leading content portal that defined innovation in the early years of the Internet: Yahoo is up for sale as it is struggling to compete against Facebook, Google and specialty apps for advertising dollars and user loyalty. And also missed the shift to mobile devices.
Yahoo was striving to build one of the most visited sites in the country and a robust online display advertising business for the past two decades.
Luckily, it succeeded at both.
However, the times have changed now. Though, Yahoo was able to popularize its email service and bring in massive numbers of viewers. Yet it wasn’t able to make enough money to satisfy Wall Street.
The latest snapshot of Internet company’s first-quarter earnings is the proof of company’s deteriorating condition.
Why is Yahoo up for sale? What went wrong?
The company failed to adapt to the two major trends of the consumer Internet:
- The rise of social networks
- The exploding popularity of mobile devices
The latter proved the most brutal for Yahoo. Because display ads don’t translate well on mobile phones and consumers like to spend much more time on apps rather than surfing the mobile Web.
Some say that the roots of Yahoo’s problems were seeded long ago. As Facebook and Google were winning the war for advertising dollars, Yahoo saw its best software engineers leave for greener pastures in Silicon Valley.
Without the required talent, the company struggled to build viral products that can keep up with the consumer’s tastes and expectations.
Jeffrey Smith, chief executive of the Starboard Value hedge fund, also wants Yahoo to sell its core business.
His firm has also proposed an alternative slate of 9 directors to replace Yahoo’s entire board at the company’s next annual shareholder meeting this summer.
But Yahoo Didn’t Lose Hope
In 2013, a high-profile attempt to attract audiences, of hiring network news star Katie Couric as Yahoo’s first “global news anchor” didn’t work as planned.
Unfortunately, the audiences didn’t show up in large numbers, depressing Mayer’s strategy to sell higher-priced video ads.
Who can be the potential buyer?
Several buyers have expressed interest. Because acquiring Yahoo could instantly turn a small or medium-size media company into one of the biggest sites in the world.
Ms. Mayer hinted that Yahoo would prefer a buyer like Verizon as opposed to a purely financial buyer like a private equity firm.
Verizon Communications, the mobile phone carrier that already owns AOL, is aggressively aiming to become an Internet business in its own right.
However, its sale would be a dramatic letdown for company executives.
And Yahoo is likely to fetch a price much lower than all the money Marissa Mayer spent trying to transform it.