Monday, February 22, 2016

Yahoo Suffering Identity Crisis

Yahoo! Sign at 701 1st Ave. Yahoo headquarters

As industries change and markets shift there’s always an also-ran. A business once profitable that can’t seem to find a new way to make money when folks no longer want what they offer. Currently facing a similar situation: Yahoo.

As the ‘net goes mobile and more people depend on apps rather than websites to connect online, internet homepages are fast becoming a thing of the past. While there are still some holdouts, Yahoo decision makers are wisely considering other options. In a recent news report, Yahoo execs admitted they have formed a committee whose sole purpose is to explore strategic alternatives as it works to revamp its Internet business.

Meanwhile, CEO Marissa Mayer is facing strong pressure from certain stockholders to split up Yahoo’s assets and liquidate core business interests. As a result – or perhaps as a desperate stopgap, Yahoo reached out to major equity and investment firms for financial advice, engaged a phalanx of top shelf attorneys and circled the wagons. They want to change course, not destroy what they have built.

It’s a tough line to walk. Consumers are moving away from the services that made the Internet pioneer a household name. They want a different way to engage online, mobile and interactive opportunities that Yahoo’s competitors have been quick to supply.

Slow to react to changing consumer tastes and unable to drive any of that market shift, Yahoo faces a difficult road ahead. From a public relations perspective, the sin is easy to spot: they thought consumers would come to them, rather than responding to changing consumer appetites. It’s a lesson many businesses learn the hard way. If you are not willing to change, to sacrifice what you have built to make something new and better, you will eventually find yourself left behind, wondering where you fit in the current Way of Things.

David Milberg is an investment banker from NYC.

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