Yahoo’s a yawn
Yahoo Inc. is a badly managed company with 40 or so poorly conceived and terribly managed sites that attract few users and even fewer advertisers.
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Dear Mr. Berko:
What wrong with Yahoo? I’ve owned the stock for more than a year, and the company seems to have two left feet. I’m beginning to worry about its viability. I used to use Yahoo Finance and Mail, but had to change sites because inaccurate financial dates, frequent annoying pop-ups and delays in loading were driving me crazy. I would like to sell my shares, because the stock seems stuck in a rut.
G.P., Springfield, Ill.
Dear G.P.:
Yahoo Inc. (YHOO-$15.19) is a badly managed company with 40 or so poorly conceived and terribly managed sites that attract few users and even fewer advertisers. And advertising revenues is what this company is all about.
You’re correct – YHOO’s most popular sites (search, Yahoo Finance and Mail) are so awfully managed that some industry insiders chuckle in disbelief. Finance data is not dependable and is often inaccurate, and its mail platform is chock-full of burrs. Those pigeons who run Yahoo Finance are either dyslexic or accuracy challenged. And the squabs who run the Yahoo Mail are similarly disabled.
Carol “The Big Mama” Bartz, who runs the company, is responsible for these embarrassing failures. When Bartz took the reins from founder Jerry “Ying” Yang two years ago, YHOO was an also-ran in every one of its online categories, and it still is today. Its social networking is a bust, its search site isn’t worth a tuppence, and its keyword advertising content is an abysmal failure.
Yang, who rose to his level of incompetence several years ago when he spurned a $32 per share offer from Microsoft, must have been soft in the head to hire Bartz, whose experience in advertising is limited to reading advertisements in gun magazines. Bartz shot herself in the foot criticizing Google’s business model, which recorded 23 percent revenue growth last quarter — a number that her YHOO executives (many of whom hold her in low esteem) would kill for.
Meanwhile, Yahoo Sports, Entertainment, Travel, Shopping, Real Estate, Autos, Small Business, Lifestyles, Hot Jobs, Finance, etc., all designed to encourage users with online content, have failed miserably under Bartz’s vacuous tutelage.
Though revenues have reversed their slide (they increased 1.5 percent this year), most on the Street will not recommend this stock. I agree with “most on the Street,” as well as Value Line, which clearly spurns Yahoo.
YHOO has a swell balance sheet with almost zero debt and, not surprisingly, a lousy return on shareholders’ capital and equity. The company’s book value is a solid $10 per share, and it has a sweet cash flow of $1.7 billion. YHOO has the balance sheet to do the job for its shareholders.
But alas, Yahoo’s biggest problem is Bartz, who can’t line up her ducks because she doesn’t know where they are. Her communication skills need help, and a close acquaintance who is a big small-shot at Yahoo tells me that Bartz talks over her subordinates, steps on their ideas and is not well-liked; the rumor is that she may not be long for the job.
It makes sense. This is a dynamic industry, and the competition for user attention is eating YHOO’s dinner as well as its dessert. And while a major chunk of Yahoo’s advertising revenues business comes from “search” that has almost zero switching cost, Bartz — with access to an enormous cash cache — has allowed Yahoo to fall light-years behind Google in search technology and users. Sell the stock before Bartz and an inutile, fawning board of directors steer Yahoo into a sinkhole.
Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, Fla. 33775 or e-mail him at mjberko@yahoo.com. © 2010 Creators.Com
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