Yahoo!: Changing Generals After The War

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Yahoo! (YHOO) has announced that its head of sales is out. That part of the company will be combined with a business development unit and run by a new chief. It does mean that YHOO has lost its two most visible sales executives, the ones with the greatest ties to Madison Avenue, wherever that may be. Having this kind of turmoil among the people who bring in the money doesn’t sound wise.

But, no matter. Yahoo! has already lost the war for getting rapid growth from its current businesses. Display ad growth is slowing across the industry and Yahoo!’s improvement there is almost at a standstill. The company’s new Panama project, which was build to take market share from Google’s text ad business, has not show that it can push back the tide of a stagnant topline.

Yahoo! does have e-commerce and licensing businesses, but it is not in a lead position in any of these. Its jobs site is fairly large. The company has modest shopping and travel businesses, but they are not at a scale where they can pull the company out of the mud.

All of this means that, withing reason, it does not matter who runs the revenue operations at YHOO. The company does not have the tools it needs to restart growth.

M&A is almost certainly Yahoo!’s only way out. It is risky. With its stock so low, the portal company will have to give up a large part of its equity to get anything good. It will probably have to gamble that the social network business can eventually bring in a lot of revenue. Facebook is now the No.17 site in the US in terms of traffic. Yahoo! could makes some buys in vertical markets, perhaps pick up Monster (MNST) or CNET (CNET).

But, this is all old news. Yahoo!’s future strategy is endlessly debated.

In the meantime, the company is not doing anything.

Douglas A. McIntyre