Thursday, April 19, 2007

Yahoo! Needs "Plan B" After This Week More Than Ever

This week has been one of the darkest for Yahoo! since our "Plan B" group started pushing for change at the Internet company on January 7th. From the first day after our campaign launched, Yahoo!'s stock price has been positive and ahead of Google's -- sometimes far ahead.

There was a time, a few short weeks ago, when Yahoo!'s stock price was up 13% while Google's was down 13% since the shareholder advocacy launched. Tonight, in the after-market trading, Google surpassed Yahoo! for the first time since the early part of this year in terms of percentage gains. In fact, today is also the first day since our launch when Yahoo!'s stock price is below where it was on January 7th.

As a shareholder group which believes in the long-term growth potential of Yahoo!, this has been an incredibly difficult week. Our group lost $7 million in shareholder value - from $61 million last week to $53 million tonight. Of course, we're in the same boat as all Yahoo! shareholders.

There's no question that the market got way too jazzed up about the "quick-fix" impact of Panama on Yahoo!'s results. There was also a bit of "Google-had-its-time-in-the-sun-for-the-last-2-years-so-it-must-be-Yahoo!'s-turn" stock-picker mentality driving the jump in Yahoo!'s stock price.

Several months ago, we cautioned that Panama was no cure-all for Yahoo! The biggest issue facing them is a continued loss of share in search. It's still an issue. Because of this, revenue growth has been steadily declining in each of the last 4 quarters. As Anthony Noto noted, it will be difficult to suddenly escalate the single digit growth to 20+% by end of year.

This has been a difficult week for Yahoo!'s shareholders: a difficult Q1 that stands out even more when compared to eBay's and Google's stellar results announced in the days afterwards.

Our group has offered a plan to improve Yahoo! We are asking other Yahoo! shareholders to join our group and support us.

We believe in this company -- today, more than ever. Some Yahoo! shareholders have sold their stock as a sign of their displeasure (this selling continued, concerningly, today). That's their right. However, our shareholder group wants to be part of the solution. We believe there is still tremendous unlocked potential in this great company which possesses some of the best people in the technology world.

We support Yahoo!, but shareholders need "Plan B" today more than ever.

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4 comments:

Anonymous said...

Declining search share wasn't the culprit behind the disappointing earnings - weakness on the display side was to blame. Yahoo! has been king of the display hill, but others are now starting to chip away at that, so marketing dollars are shifting away from Yahoo! display to other, up and coming audience aggregators. This is a core problem. Yahoo! does not have a cohesive strategy on how to monetize social media content - and this user generated content is arguably of lower quality/harder to QA and therefore potentially of less value to advertisers. Panama is great but it can't compensate for losses on the display side, as well as declines in subscription-based services revenue.

Eric Jackson said...

Thank you. Your analysis is spot on. Please excuse my brevity in my post. Loss of share in search is core, but display ads is now in imminent danger from goog-doubleclick and others. Semel has consistently discussed leadership in display ads, video, social networking, as the strategy with little else by way of explanation. Yahoo! Shareholders need a much more clear strategy which shows a path to success.

Harshal Soni said...

So Tell me one thing here...

You use Google's Blogger, Google's YouTube to get a campaign running against Yahoo...

Intersting... Have you considered getting out there to start useing Yahoo services... may be your blog gets popular and Yahoo might benefit with some revenues...

Now use use GOOG's services and lobby against Yahoo... I dont think it gives a good impression...

I myself am a YHOO shareholder... not a whole lot of shares but I have seen my shares going down... I am too disappointed on that...

Eric Jackson said...

Hi Harshai:

I use Flickr for photos. I will use Yahoo for blogs and video in the future if successful.... For now, it is on Google, as you point out.

Thanks,

Eric