|I. Current Situation |
A. Yahoo’s Current Performance (2006)
In 2006, Yahoo’s return on assets plummeted from 18.95% in 2005 to 6.73% in 2006. In addition to the poor return rates, Yahoo’s market share dropped from 30.5% in July 05 to 28.8% in July 2006. Google (Yahoo’s main competitor) however, showed an impressive market share increase from 36.5% in July 2005 to 43.7% in July 2006. Yahoo’s Profitability (Return on Assets) dropped 12.22% (18.95% in 2005 to 6.73% in 2006).
• Total revenue was $6,425.68 (million) in 2006
• Gross Profit $3,756.58
• Net Income $751.39
B. Strategic Posture
In December 2006, Chairman and CEO, Terry Semel announced the reorganization of Yahoo. The focus of this reorganization was to make major changes in Top Management / Executive Team. Semel’s reorganization strategy
• To connect people to their passions, their communities and the world’s knowledge. (Yahoo SEC 2006 Annual Report, www.yahoo.com)
• Yahoo intends to bring Internet users back to their search engine by making their web-entry customer friendly, easier to use and navigate through.
• Semel’s plan is to focus more on what the customers want rather than focusing on expansion into other areas.
• Expand customer-centric culture and capabilities: Yahoo will focus on the customer, not the product
• Create leading social media environments: Yahoo will attract customers to their social media environments in order to contribute and use information such as the sharing of music, photos, etc.
• Lead in next-generation advertising platforms: Yahoo will offer a diverse range of advertising opportunities from big business to small local merchants.
• Drive organizational effectiveness and scale: Yahoo intends to retain their existing experienced staff and look to hire industry leading professionals as well.
• In order for Yahoo to bring customers back to their web-portals, they must refine their services and concentrate on “real-time” consumer needs. In addition to refining, Yahoo will reduce or eliminate some services that are not desired by consumers. According to Allen Weiner, “Yahoo is by no means out of the game, but its time to execute on a more tightly focused vision. That’s what’s missing.”
• Develop site for high-profile brands (Brand Universe) that will include popular television shows. Furthermore, allowing visitors to skip advertisements will less complicate accessing these outlets.
• Through the reorganization, the company plans to align its operation with the key customer segments of audience, advertisers, and publishers and capture the emerging growth opportunities especially in the Internet, and become more customer-focused with the support of technology.
• This reorganization is consistent with how Yahoo intends to change their corporate strategy and change how their “top-down” bureaucracy operates.
|II. Corporate Governance |
A. Board of Directors
• Roy Bostock – Chairman, The Partnership for a Drug – Free America, has been a member of the board since May 2003 (External Member)
• Ron Burcle – Managing Partner, The Yucaipa Companies, has been a member of the board since 2001 (External Member)
• Eric Hippeau – Managing Partners, Softbank Capital, has been with the board since 1996 (External Member - Investor)
• Vyomesh Joshi – Executive Vice President, Imagining and Printing group, Hewlett Packard, has been a member of the board since 2000. (External Member)
• Author Kern – Investor and member of the board since 1996...