The Blame Game Hits Yahoo!

Stocks:  (GOOG)(MSFT)(YHOO)(TWX)

The sun is setting on Yahoo! and management is pointing figures.

A memo from one of the companies senior vices presidents claims that the company has spread its efforts too thinly, like peanut butter on bread.

The memo, which as lead to the formation of a group to suggest changes at the huge internet firm, called for a large reduction in staff at Yahoo! along with extensive managment changes.

While Yahoo! remains on of the largest internet site in unique visitors, accoridng to ComScore, Google has been gaining on its older rival for several years.

While the details of the memo might be debated, the overarching theme is almost certainly correct. While internet portals like AOL, MSN, and Yahoo! have lost popularity and revenue growth, sites that are more focued on doing a few things well–from Google to MySpace to YouTube–have flourished.

While Google’s shares have run from a 52-week low of just over $331 to $499, Yahoo!’s have slumped from $43.66 to just under $27. Yahoo! has done a poot job keeping up with major trend on the internet from building large community sites to having a major presence in video.

Yahoo! is now exhibiting the kind of management ferment that often occurs at flagging companies. With long-time executives at odds about the big web operation’s future, things are likely to get much worse before they get better.

Investors have to wonder what happened to Yahoo!’s CEO. Someone must be driving the bus.

Douglas A. McIntyre can be reached at [email protected]. He does not own securities in comapnies that he writes about.