Yahoo: Old Wine, Old Label

company_overview.jpgHoward Rubenstein’s first rule of crisis management is this: Always tell the truth. That’s exactly why so many people suspect Yahoo is still in trouble, even with its vilified lightning rod – formerly known as CEO Terry Semel – has been shown the door, or showed himself the door, or whatever happened.

It’s not very clear – and that is precisely the problem with Yahoo, with or without Semel.

The news, at once surprising and overdue, is nevertheless good enough to drive the stock up 4.7% in aftermarket trading. Yahoo’s stock came alive in the last 90 minutes of trading, as word seems to have spread about Semel’s imminent departure. Since then, the stock has gained 6.3% – in stock terms, surely one of the most productive days Semel has had in months.

But as significant as the news is, it raises more questions than it answers. Look at how the board pats Semels’s back with one hand even as it shoves him out with the other. Or how Semel is forced to praise his successors – one of the biggest dishes of crow an Internet executive has had to swallow in some time. And then there’s new CEO Jerry Yang’s ebullient blog post, where he rambles on giddily about Yahoo’s vision going forward.

“A Yahoo! that executes with speed, clarity and discipline. A Yahoo! that increases its focus on differentiating its products and investing in creativity and innovation. A Yahoo! that better monetizes its audience. A Yahoo! whose great talent is galvanized to address its challenges. And a Yahoo! that is better focused on what’s important to its users, customers, and employees.”

He might have added: ” A Yahoo! that can say: ‘I’m good enough, I’m smart enough, and doggone it, people like me!'”

Yahoo has been a vital presence in the Web world for at least a dozen years. It’s sad to see it without its mojo. While I don’t buy the line that Yahoo was a check against the evil monolith of Google, Yahoo has been in the past a key competitor, making Google better by being itself very good.

Then it jumped the rails. Innovation was stifled, executives bolted in disturbing numbers, and the stock drifted downward. Everyone (I’m betting even Google) wants to see blood back in Yahoo’s veins. But there are several questions that demand to be answered frankly:

  • Why not Sue Decker as CEO? Why Yang, who Semel was brought into replace after he and co-founder David Filo let the company run adrift?
  • Yang must have improved as a leader of a large company, but how can anyone be sure?
  • Does this change Yahoo’s chances of being bought out by, say, Microsoft?
  • How soon will Yahoo fill management holes and revive morale, and how will it do so?
  • Aside from deploying Panama, what concrete strategies are planned to return Yahoo to success?

I think Yahoo investors would have slept a lot better tonight having read a single statement like this: “We thank Terry for his contributions as CEO, but investors with a larger stake in the company than he has have pushed him out. It may look like things are a mess right now – and they are – but we have a solid plan to right the company this year.”

Instead, we have corny PR. I doubt we’ll really know whether Yahoo can return to its former glory until another quarter or so. But if this Internet star continues to devolve into an Internet dwarf, it’s not just Yahoo who will suffer, it’s all of us.