Analysts: New Yahoo CEO must shed assets for better focus

Yang's departure provides company an opportunity to come up with a plan for survival

Whoever takes embattled Yahoo CEO Jerry Yang's place will need to pare the former Web sweetheart's services to effectively compete in a market where it is under siege from Google and multiple social media players for online advertising, analysts say.

Yang, who Monday announced that he will step down as Yahoo's CEO once a replacement is found, had taken multiple unsuccessful steps in recent months to turn around the flagging Internet pioneer. In May, he fended off Microsoft's move to buy Yahoo, and then failed to consummate a planned search partnership with Google.

Then, after Google backed away from its proposed deal with Yahoo earlier this month, Yang called on Microsoft CEO Steve Ballmer to re-start negotiations to buy the company.

Yang is not perceived as having that kind of "boldness or decisiveness" that a company competing in today's Web landscape needs, said Andrew Frank, an analyst at Gartner. "[Yang's departure is] a sign that Yahoo needs to really find leadership that can restore confidence in the company. I don't think they are so much in danger of immediately going under as they are in facing continued erosion of confidence in the company's leadership and direction."

The next CEO, he added, must convince the market that Yahoo has a sound plan and the decisive leadership to carry it out, he added.

"Yahoo suffers right now from a somewhat fragmented portfolio of service and innovations," Frank added. "Rationalizing that portfolio with or without some kind of new partner or merger is going to be very important. Yahoo isn't getting the synergy that it needs out of this combination of stuff that they have."

David Card, an analyst at Jupiter Research, now part of Forrester Research, added that the new CEO will need to do an inventory check of Yahoo's assets. Yahoo finds its traditional Web portal model under siege from Google while multiple upstart social networking players cut into its potential advertising revenue, he added. "Yahoo really has not pulled off an answer to those threats," he noted.

However, Yahoo does have a large, loyal audience base that is increasingly offering up user-generated content that could be used to help its advertisers target the users, Card added. "They have a lot of information about their customer base," he said. "In theory you could open those things up to a more socialized approach and or you can use that information for advertising targeting. It hasn't been able to convince advertisers that the value is there ... to take advantage of that targeting."

In addition, Yahoo under Yang has maintained the need to remain in the search business because of its potential advertising revenue, Card noted. "They believe there is this magic that can happen when you understand the search side and the display side. This is another thing that Yahoo has not proven to anybody. The new CEO has to make a tough call on whether that is reality or not," he said.

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags Yahoo

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Heather Havenstein

Computerworld
Show Comments

Father’s Day Gift Guide

Brand Post

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Luke Hill

MSI GT75 TITAN

I need power and lots of it. As a Front End Web developer anything less just won’t cut it which is why the MSI GT75 is an outstanding laptop for me. It’s a sleek and futuristic looking, high quality, beast that has a touch of sci-fi flare about it.

Emily Tyson

MSI GE63 Raider

If you’re looking to invest in your next work horse laptop for work or home use, you can’t go wrong with the MSI GE63.

Laura Johnston

MSI GS65 Stealth Thin

If you can afford the price tag, it is well worth the money. It out performs any other laptop I have tried for gaming, and the transportable design and incredible display also make it ideal for work.

Andrew Teoh

Brother MFC-L9570CDW Multifunction Printer

Touch screen visibility and operation was great and easy to navigate. Each menu and sub-menu was in an understandable order and category

Louise Coady

Brother MFC-L9570CDW Multifunction Printer

The printer was convenient, produced clear and vibrant images and was very easy to use

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Featured Content

Product Launch Showcase

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?