Is Yahoo! Losing its Nerve?
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What did Yahoo! CEO Terry Semel and CFO Susan Decker mean when they made comments recently that sounded like the company was throwing in the towel in its long-time rivalry with Google? Should you sell your shares? Not without taking another look at Yahoo!'s strategy.
Some comments made by some high-level executives at search company Yahoo! set keyboards clicking at the desks of industry analysts, bloggers, and interested observers. These comments seemed to imply that Yahoo! had thrown in the towel, and was conceding defeat in the face of Google, its apparently unstoppable competitor. It even sounded as if Yahoo! was actually content with a position in the search market that is secondary to Google's.
The comments were made in the context of Yahoo! reporting its fourth quarter and year-end financial results for 2005. Susan Decker, the company's chief financial officer, admitted that "We don't think it's reasonable to assume we're going to gain a lot of share from Google." She went on to say that "It's not our goal to be No. 1 in Internet search. We would be very happy to maintain our market share." It's not Yahoo!'s goal to be number one? What kind of talk is that, coming from one of the oldest search companies online?
Even more apparently damning, defeatist words came from Yahoo!'s CEO, Terry Semel. In an interview with the Associated Press, Semel said that "Frankly, Google has done a better job than us. It's like we built our house first and someone came along and built an even better house."
This kind of talk, coupled with results that fell short of expectations, certainly didn't help the company's stock. Yahoo!'s shares fell more than 12 percent after the announcement. What's a shareholder to think -- or do -- when it sounds like the fight has gone out of a company? Some would sell. To my knowledge, I don't own shares of Yahoo!, Google, or any Internet search company, but rather than selling, I would suggest digging deeper. As any journalist will tell you, remarks are at least sometimes taken out of context, and then spun in whatever way suits the story.
Next: A Closer Look at the Results >>
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